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northern rock on the news begging for cash
Comments
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Barings didn't go bust in the sense of defaulting on its obligations to savers. It was sold to ING.
BCCI is the ONLY recent bank collapse where savers lost out. And BCCI was a very obscure bank.
Northern Rock is a completely different kettle of fish.0 -
Damnit, I predicted NR'd demise to my folks a month or so ago. They're on holiday so going to mss me being (almost) right for once.
Top story on Newsnight."Mrs. Pench, you've won the car contest, would you like a triumph spitfire or 3000 in cash?" He smiled.
Mrs. Pench took the money. "What will you do with it all? Not that it's any of my business," he giggled.
"I think I'll become an alcoholic," said Betty.0 -
MarkyMarkD wrote: »Barings didn't go bust in the sense of defaulting on its obligations to savers. It was sold to ING.
BCCI is the ONLY recent bank collapse where savers lost out. And BCCI was a very obscure bank.
Northern Rock is a completely different kettle of fish.
There are some instances where one would like to be able to post "Thanks" twice.
:T :T :T :beer:Warning ..... I'm a peri-menopausal axe-wielding maniac
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jubblyjimbo wrote: »It is unlikely that NR would have to start calling in loans, or go bankrupt.
Can you call in a mortgage or a consumer loan (in most circumstances if it's not defaulted)? I don't think you can although I'm no expert.jubblyjimbo wrote: »I don't think we are witnessing a collapse of the banking system.
Nor do I. The money markets don't wholly agree with us though.jubblyjimbo wrote: »What is likely is that as NR are borrowing from the BOE at penalty rates they will seek to pass that on to borrowers in the form of higher mortgage rates. And as they're borrowing they havent got oodles of spare cash to lend as mortgages.
As I understand it, NRK've repriced their mortgages effectively to prevent them from having to lend any more money.0 -
If the BoE will ALWAYS step in and there is no chance of savers losing their savings, what is the point of this first £35K guarantee thing? Why don't they just say 100% of your savings are safe so sit back and relax?0
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Debt_Free_Chick wrote: »"Barings was purchased by the Dutch bank / insurance company ING for the nominal sum of £1 along with assumption of all of Barings liabilities"
Translation? The money owed by Barings Bank was coughed up by ING.
The problem right now is that nobody has a clue who owes what to whom and where the risk lies. No bank is going to take on the liabilities of another if they don't know what they are.
BCCI was fraud, fine.
Barings was a pretty small outift by the standards of HSBC or Citibank.
The trouble is, banks like Lehmans and Goldmans have huge amounts of loans on their balance sheets that really shouldn't be there (they should have been sold but there aren't the buyers). Big European banks have bought a lot of crud and are going to have to mark it to market (take the loss on to their books) at some point.
If Barings goes bust or is bought out then fine, no biggie. But Goldmans or Paribas or Deutsche? That's the sort of thing that could cause a systemic problem.0 -
I thought the BoE had indicated yesterday that they would not be acting as an insurance policy for banks?
Were they asking banks to raise interest rates themselves?
(I haven't got a clue - I'm genuinely asking!)Everything that is supposed to be in heaven is already here on earth.
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If the BoE will ALWAYS step in and there is no chance of savers losing their savings, what is the point of this first £35K guarantee thing? Why don't they just say 100% of your savings are safe so sit back and relax?
Not least because, if the whole system went t!t$ up, the even the BoE probably wouldn't have enough money.
But I think you're both misunderstanding the situation and misrepresenting it.
NR are not suggesting that savers have or are about to lose their money.
Like all other lenders, NR borrow money from the "market" to lend to those who want mortgages. "The market" has shrunk recently, as lenders have become fussier about lending money, in general. Partly because of concerns about borrowers' ability to repay and partly because "the market" wants us to borrow less. So ... there is less money to be borrowed by us, as individuals, and by institutions, as "wholesalers" of lending.
NR have gone to the BoE to say "we have promised to lend more money, than we can borrow from the market. Can you fill the shortfall?"
The BoE have said "yes, OK". You have to make a judgment about the BoE's motives for doing this. If the BoE thought that NR could not honour that loan, would the BoE have lent the money? We're talking about the toughest lender in the Country, when we refer to the BoE.
I'm not sure how you've made the connection that savers with NR might lose out - have I missed something?
Warning ..... I'm a peri-menopausal axe-wielding maniac0 -
If the BoE will ALWAYS step in and there is no chance of savers losing their savings, what is the point of this first £35K guarantee thing? Why don't they just say 100% of your savings are safe so sit back and relax?
sssssh! You don't want to give any of the 'DONT PANIC' brigade sleepless nights.
Northern Rock are the prime example of UK sub-prime. Yes folks, sub-prime isn't just something that happens in the USA despite what the media would like you to believe.
There's a reason why they're the first (yes, only the first) bank to go cap in hand to the BoE.
We've had a decade of dodgy, irresponsible loaning lead (in the UK) by the likes of Northern Rock. Who could have guessed that giving money to people who can't repay it would come back to bite you in the behind :rotfl:--
Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.0
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