Northern Rock to be Nationalised

lynzpower

Im staggered really, I cant truly believe that the 'safe pair of hands' has taken on the liability they themselves have created.

DaveyDave_3

subjecttocontract wrote: »

What ever the Government had decided to do would have caused one or more groups to have crtiticised it.

Can anybody suggest THE solution that would have suited everyone ?

Yes. Sensible interest rates consistent with the historical average over the last 5 years would have avoided the vast majority of this mess.

Optimist

Given the very good chance of a falling housing market it is going to be interesting when a nationalised bank starts repossession's on the public's mortgages. Or maybe Alistair Darling is going to guarantee those too

Running_Horse

So. You default on your NR mortgage, and "Prudence" Brown throw you on the streets. We live in interesting times. As for confidence, let the other banks bail NR out; a sort of self-interest thing.

aah

About time.

The government were desperate not to nationalise this company - the potential private sector buyers obviously wanted it on the cheap cheap and there would have been abolutely no chance of taxpayers getting anything back.

I hope its complete nationalisation and get the taxpayer owners in as the shareholders, those with public interest at heart. I can't believe this has gone on for nearly 6 months and the government has permitted business profit interest (which got us into this mess) to prevail until now.

Why should Branson et al get their greedy hands on this bank and its safety net of government money. He has done enough of that with the railways.

I have a (prime) NR mortgage and this news is more likely to make me keep it there.

And don't be so cynical - Labour doesnt need to buy northern votes, it keeps its sweeteners for soft southerners. Northern interests generally get ignored as the votes are secure.

WTF?_2

subjecttocontract wrote: »

What ever the Government had decided to do would have caused one or more groups to have crtiticised it.

Can anybody suggest THE solution that would have suited everyone ?

Sure - the FSA would have done its job and prevented the bank from pushing forward with an idiotic business strategy that left them mostly reliant on a specific set of conditions being present in the credit market and completely exposed if those abnormal conditions changed. If necessary, the government should have implemented new regulations that would have prevented banks from fiddling around with 'financial instruments' in order to get debt off of the balance books to circumvent existing measures.

Aside from that, interest rates were too low for too long. The Bank of England should have raised them much earlier and steeper than they did to prevent the culture of gorging on debt from taking a hold in the UK economy. This would have prevented the irrational bubble from inflating as it did and left them with scope to make substantial cuts around now to boost growth as a global slowdown happens. I suspect that the bank's decision to keep rates so low for so long was not entirely independent and that the government has been influencing the MPC through a careful choice of membership.

DaveyDave_3

!!!!!!? wrote: »

Aside from that, interest rates were too low for too long. The Bank of England should have raised them much earlier and steeper than they did to prevent the culture of gorging on debt from taking a hold in the UK economy. This would have prevented the irrational bubble from inflating as it did and left them with scope to make substantial cuts around now to boost growth as a global slowdown happens. I suspect that the bank's decision to keep rates so low for so long was not entirely independent and that the government has been influencing the MPC through a careful choice of membership.

Yeah, that rate cut in 2005 now looks pretty damn stupid. Merv wanted a hold but the rest of board overode him and HPI ballooned again as a consequence- Oh dear.

Rover

Interesting times ahead. Another tough day for the FTSE tomorrow.
I believe the shares will be suspended indefinately but I fervently hope these speculators and hedges who jumped in on the slide lose the lot.
A&L and B&B will be under further pressure from now on, these now have their underbellies showing since NR sank.

Generali

Rover wrote: »

Interesting times ahead. Another tough day for the FTSE tomorrow.
I believe the shares will be suspended indefinately but I fervently hope these speculators and hedges who jumped in on the slide lose the lot.
A&L and B&B will be under further pressure from now on, these now have their underbellies showing since NR sank.

Well the collapse of NRK seems to have had the desired effect with those 2 firms as they both seem to be using very conservative funding models now.

BobProperty

subjecttocontract wrote: »

What ever the Government had decided to do would have caused one or more groups to have crtiticised it.

Can anybody suggest THE solution that would have suited everyone ?

Well I can give you one which I have mentioned before and which will have one financial sector laughing smugly to itself. It should not have been de-mutalised. We have lost mutual building societies over the years, there's about 50-55 now, 20 years ago that figure was nearer 90. NR would never have been able to borrow and lend like it did if it were still a mutual.
As with several other posters, I think the NR should have been allowed "to go to the wall". The management changed its approach and started borrowing and re-lending, all fine when markets are booming and credit it easy. Now it's dried up and the government has to step in. WRONG MOVE. If letting NR fail would be bad for the financial markets and the UK economy then nationalising NR is worse. Any big bank with the slightest wobbly figures and the markets will bail out because they don't want to lose everything when the government nationalises it. Great move by GB and co., you've just given several UK banks the stockmarket equivalent of the "Black Spot".