Carney guarantees low rates on breakfast tele

CLAPTON

Thrugelmir wrote: »

Figures aren't published. NR was allowed to continue as it did in the period leading up to it's problems. That's the inherent danger of putting civil servants into a commercial business.

Yes but did it cause any losses?
Were the mortgages delinquent?

Thrugelmir

CLAPTON wrote: »

Yes but did it cause any losses?
Were the mortgages delinquent?

We'll have to wait and see how NR plays out. NRAM still held £76 billion of mortgages and loans in the last published accounts.

wotsthat

Thrugelmir wrote: »

Doubt it was his personally. The various outcomes would have been considered. No one knew the extent of NR's problems. Remember the Directors were filing false information with the FSA. NR continued to advance 125% mortgages after the bailout in Sept 2007 through to Mar 2008. At this time NR was under the control of the Treasury. So the Government actually dug a huge hole of its making. Actually compounding the problem. Rather than tightening up underwriting criteria months earlier.

How many 125% mortgages were offered after the deposit guarantee (Sept 2007) or nationalisation (Feb 2008)? Yes it could be considered an oversight but as part of the big picture we're talking about peanuts and I suspect the mortgage holders have been happily paying them off since.

Clearly though different paths could have been taken. If the bank had been allowed to go bust with HM Government as a preferred creditor (after reimbursing savers) the assets could have been sold and we would have known within months what the cost of the bailout was. We wouldn't have needed to 'wait and see how NR plays out' and wouldn't have had to pay millions in legal fees to shareholders who thought that as the bank wasn't bust it had some value.

CLAPTON

wotsthat wrote: »

How many 125% mortgages were offered after the deposit guarantee (Sept 2007) or nationalisation (Feb 2008)? Yes it could be considered an oversight but as part of the big picture we're talking about peanuts and I suspect the mortgage holders have been happily paying them off since.

Clearly though different paths could have been taken. If the bank had been allowed to go bust with HM Government as a preferred creditor (after reimbursing savers) the assets could have been sold and we would have known within months what the cost of the bailout was. We wouldn't have needed to 'wait and see how NR plays out' and wouldn't have had to pay millions in legal fees to shareholders who thought that as the bank wasn't bust it had some value.

you have a somewhat bizarre view of bankruptcy.

a bank has two basic types of items on it's balance sheet

liabilities i.e. deposits or peoples savings
assets i.e. mortgages and loans

clearly one doesn't bail out assets (they have value and are cash generating); one bails out the depositors/savers.


if the government had bailed out the depositors then the bank would not be bankrupt .. in fact the exact opposite it would be the most solvent bank in the world with lots of cash generating assets and no liabilities.

Whether it would have been better to have sold the loan/mortgage book immediately is a valid matter of debate.
In practice, it would have been a political liability as the value of the assets (loans etc) was bound to rise (as it has done) and so the government would have been accused of panic selling at a low price to their mates in the city.

HAMISH_MCTAVISH

As has been pointed out many times, even the Northern Rock "bad bank" containing the worst of the worst of UK mortgage lending, has made over a billion pounds of profit over the last couple of years.

Defaults on mortgages did not bring down Northern Rock.

harpoboy

HAMISH_MCTAVISH wrote: »

As has been pointed out many times, even the Northern Rock "bad bank" containing the worst of the worst of UK mortgage lending, has made over a billion pounds of profit over the last couple of years.

Defaults on mortgages did not bring down Northern Rock.

Please Hamish

Dont spoil a good self-pitying rant with the truth!!

:rotfl:

Thrugelmir

CLAPTON wrote: »

Whether it would have been better to have sold the loan/mortgage book immediately is a valid matter of debate.

Who to though? The GFC was already underway.

CLAPTON

Thrugelmir wrote: »

If wage inflation exceeded cost inflation. Then I would agree. Currently it doesn't. So leveraging up on debt, as was the thing to do in the boom times, may not prove so profitable.

BOE has targeted the unemployment rate. As there's plenty of labour capacity that can be absorbed in the economy with no impact on wage levels. So no risk of inflation in this regard running away at the current time.

Leaving the Government and the consumer with the task of chipping away at the monumental debts that exist.

News from Australia suggests that the commodities boom is over. Which will result in downward pressure on UK imported inflation.

consumer debt is rising

Thrugelmir

CLAPTON wrote: »

consumer debt is rising

Personally I'm optimistic that the corner will be turned shortly. Without Government funding then highly likely it would have fallen already. Lets see how the next 18 months go.

CLAPTON

Thrugelmir wrote: »

Personally I'm optimistic that the corner will be turned shortly. Without Government funding then highly likely it would have fallen already. Lets see how the next 18 months go.

which corner are you referring to?