Northern on the Rocks ?

[catgate]

"On the one hand, the provision of greater short-term liquidity against illiquid collateral might ease the process of taking the assets of vehicles back onto bank balance sheets and so reduce term market interest rates.

"But, on the other hand, the provision of such liquidity support undermines the efficient pricing of risk by providing ex post insurance for risky behaviour. That encourages excessive risk-taking, and sows the seeds of a future financial crisis

Do you think that Gordon understood what he was talking about?

Re EU questions. Didn't GB and Mandy have a big fall out after being best mates?

[Tankus]

Mandy blew his wad over the Chinese clothes import debacle ...not sure hes such a mover anymore now that cheesy has left the building ....

£100,000 guarantee to cover all savers ..Timesonline..

now the shareholders are screaming for compo ....why is this so different from Equitable life ? they were happy to take the dividens when the shares were running at over £12 each

They should take the directors (and their £1m bonus's) to the cleaners ....not the taxpayers.... perhaps..!.... Does this now mean the the BoE will underwrite all iffy financial buiness models ?

what happens if there is another Nick leeson (Barings ) ? ...does Gordo whip his wallet out for that too ....?

all a bit new territtory ....isn't it !

[catgate]

There's an election brewing. Votes have to be bought somehow. It doesn't matter how, because the electorate are paying.

[andsome]

NO WAY should shareholders be helped. When you invest in a company you take the profits and the losses, you pay your money and take your chance.

[Tankus]

Message from the board of NR

Got to wonder what sort of personal share dealing the board of directors have done in the last 4 months. Just out of curiosity

share price drop rippling out to other banks , the housing and retail sector too

Adam Applegarth did pretty well out of Northern Rock shares in the year before it collapsed. He has trousered many millions over the years, allowing him to enjoy an Aston Martin with a Ferrari for his missus parked in the driveway of his mansion. His confidence in his bank's business model long term is demonstrated by his selling of £1.5 m of shares in two days. (25 Jan 2006 sold 52,253 at 957p for £500,061.21 and the next day he sold another 111,426 at 957p for £1,066,346.82).

Guido Fawkes

Enron's crooks were massive financial supporters of the Republican party. Northern Rock gave half-a-million to Labour's favourite think-tank, the IPPR. It also employed Gordon's personal pollster, Deborah Mattinson, as an adviser

but just who is running the auction for Northern Rock? Is it the beleaguered bank's board? Is it their coterie of advisers – Citigroup, Merrill Lynch and Blackstone? Or is it Goldman Sachs, the adviser to HM Treasury? It might even be the FSA, the City watchdog. The trouble is, no one seems really to know.

Independent

A row is also brewing over the possibility that Adam Applegarth, who resigned as chief executive on Friday, will gain access to a pension with a transfer value of more than £2m and a possible pay-off worth nearly £800,000, the equivalent of his annual salary. Corporate governance activists have expressed astonishment.

The Guardian

heh ..this one is going to run and run

Over £25bn? of taxpayers money committed

LONDON (Thomson Financial) - Advisers to UK Chancellor of the Exchequer Alistair Darling are preparing plans that will allow all or part of the over 20 bln stg lifeline given to troubled mortgage lender Northern Rock by the Bank of England to continue indefinitely, the Sunday Telegraph newspaper reported without citing sources.

Reuters

A financial bomb just ticking to go off ...

[catgate]

Guido Fawkes

Enron's crooks were massive financial supporters of the Republican party. Northern Rock gave half-a-million to Labour's favourite think-tank, the IPPR. It also employed Gordon's personal pollster, Deborah Mattinson, as an adviser

Catgate Posted Sep 22 2007, 17:55

There's an election brewing. Votes have to be bought somehow. It doesn't matter how, because the electorate are paying

.

[andsome]

The whole fiasco is yet another example of corporate greed on a massive scale. What was wrong with the old way of banks and building societies borrowing savers money and lending it out at a profit to borrowers? Now we have this stupidity of borrowing billions short term, to lend out long term. It was fine when everything ran smoothly and the directors could pocket their millions. Now do to this excessive lending to people who could not afford to borrow, the whole business has blown sky high. The only people who should be helped out are the thousands of small savers, the directors and shareholders should just accept what has happened and NO tax payers money should go their way at all.

[rong]

The whole fiasco is down to the media, other banks have been borrowing like this for years apparently, Northern Rock if I remember hadn't used the money until the media got on to it.

[andsome]

The whole fiasco is down to the media, other banks have been borrowing like this for years apparently, Northern Rock if I remember hadn't used the money until the media got on to it.

So they have, and many others are also in trouble. Barclay's among them. Just because banks have been stupid enough to deal this way does not make it sensible. Billions have been made by massive borrowing short term, to lend out far too much long term to people who can scarcely afford to pay back. This is why house repossessions are on the increase again. I still say that a lot of the trouble is down to corporate greed. The media does not cause banks and other institutions to deal in a reckless manner to make more and more until the bubble bursts, they make these decisions themselves. My only complaint is that these greedy directors have all made sure that their snouts have been well and truly in the trough, and they will all come out of it very comfortably, as has already been pointed out by Tankus.

[Tankus]

Whats changed is the fall out from the sub prime collapse in the US , Northern rock's business model is the closest that we have to it in the UK .

Interbank loans have virtually dried up due to the difficulty in assessing the exposure and fallout in the US.

Vince Cable asked some cutting questions today after Darlings parlimentary statement ,none were answered .

£24bn pumped into this company with only £13bn of it as secured loan , It may be technically illegal to have done this under EU laws , shares in freefall yet again ,and the potential buyers offers are too low to be acceptable .....

This stinker has all the potential of turning out to be worse than black Wednesday ,and Gordo's plundering of our gold reserves and selling it off for the lowest price possible .!

Total amount of government exposure could be close to £40bn if the deposit guarantees (Darlings 100% protection) are included.

[CurlyWhirly]

It's got worse now with £57 billion of taxpayers money lent to the bank :0

http://news.bbc.co.uk/1/hi/business/7149405.stm

[Tankus]

[andsome]

It's got worse now with £57 billion of taxpayers money lent to the bank :0

http://news.bbc.co.uk/1/hi/business/7149405.stm

I wonder if it will ever be paid back.

[catgate]

It's very unlikely.

Moral bankruptcy and corruption is endemic in governments world wide, and it seeps down into big business and into smaller business. It is fortunate that there is not enough of it to flood the entire world's population, Although it has trickled down a long way in places.

[CurlyWhirly]

It's got worse now with £57 billion of taxpayers money lent to the bank :0

http://news.bbc.co.uk/1/hi/business/7149405.stm

I wonder if it will ever be paid back.

I very much doubt it and I expect that the bank will have to be nationalised as, in my opinion, the huge debt owed to the Government will put potential buyers off.

If all the money isn't paid back then it will be yet another excuse for the Government to tax us even more

[andsome]

They don't need excuses. The whole damned lot are so inefficient they need more and more just to waste.

[Tankus]

Back in the 80's when Barings lost $1.3bn and Gleeson did time ................. probably about £1bn in todays monopoly money ......... this was major fraud squad involvement, city investigations, and international manhunts ....!

......but its small beer compared to today with Darling and the brooon on the case ....

Sort of puts a perspective on it a bit ....dunnit !

[andsome]

Back in the 80's when Barings lost $1.3bn and Gleeson did time ................. probably about £1bn in todays monopoly money ......... this was major fraud squad involvement, city investigations, and international manhunts ....!

......but its small beer compared to today with Darling and the brooon on the case ....

Sort of puts a perspective on it a bit ....dunnit !

One big difference here though. These are politicians in the whiter than white pure and clean new Labour government. How dare you accuse them of being capable of doing wrong?

[Tankus]

The Government's financial track record suffered a fresh dent today as it emerged it was preparing to write off up to £3 billion of taxpayer-funded loans to Northern Rock to strengthen the stricken bank's balance sheet.

Rock revealed today that it had crashed to a worse-than-expected £585 million loss in the first six months of this year partly because of a blow-out in borrowers failing to meet their interest bills.

Timesonline

The number of Rock mortgage borrowers more than three months in arrears has doubled in the space of six months to 1.18 per cent of the overall home loans book. It has also been repossessing defaulting borrowers' homes at an accelerating rate, with properties in possession rising from 2,215 at the start of the year to 3,710.

Rock warned that it was particularly vulnerable to the housing market deterioration because of its past practice of offering big loans relative to the value of homes.

Got to wonder how many people took out 125% mortgages in the middle of last year , at maximum house prices. their fixed two or three year terms start to come to refinancing next year , how the hell are these people going to refinance ?

Apparently, although the loss posted was just under £600m , under Eurolaw Darling can only help out a failing company once , so its a £3bn write off for future losses ....bet he has underestimated it

yet another problem that's going to be dumped in Camerons lap

[andsome]

125% mortgages should NEVER have been allowed. When we took out our first mortgage the maximum allowed was 90%. Further, only 25% of the main earners monthly pay was allowed to be paid back per month, and only ONE earners pay was taken into account. These restrictions all helped to keep the cost of property down to sensible levels. The whole exercise has now got out of control due to the lack of restrictions. If things had remained as they were, people would not be in negative equity, or too deeply in debt to fund the repayments, and banks and building societies would have remained more viable. Sometimes a degree of control can be advisable. :D

[Tankus]

mine was 3 X max earnings and 95% , both earners ... First two years were quite hard ........

Further, only 25% of the main earners monthly pay was allowed to be paid back per month, and only ONE earners pay was taken into account.

House prices could then be related to average earnings then though Andsome

God ...I do feel a bit sorry for the 125% ers ..... took a risk , and lost it !

[catgate]

It all comes back to the bank's longstanding practice of lending, and charging interest on, something they do not have.....money. They do have notional money called credit.

They will lend credit, as though it were money, and charge interest on it, and expect you to pay back their "credit" with real money. Thus the punter has to find "real money" from somewhere in a world evermore over run with notional money.

The old Mutuals B. Socs. could not do this and so they were reasonably sound, but as soon as the banks started buying them out and operating them "their way" the excrement started to head towards the fan.

I reckon all the notional money will have to be wiped up before things return to anything like normal, but until some regulation is brought in prohibiting the lending of nothing (and charging for the service) the world will suffer.

I am led to believe that this Sharia banking system, that we hear about sometimes, has found a way round this. I would like to know more about it.

[andsome]

mine was 3 X max earnings and 95% , both earners ... First two years were quite hard ........

Further, only 25% of the main earners monthly pay was allowed to be paid back per month, and only ONE earners pay was taken into account.

House prices could then be related to average earnings then though Andsome

God ...I do feel a bit sorry for the 125% ers ..... took a risk , and lost it !

This was only because of the restrictions in place. :D

[Watchful]

I agree with what has been said above. 125% mortgages should never have been allowed! :0

We were only given a 90% one but then things were very different in the 60s and we managed with what we had, without credit.

[Tankus]

House prices are falling at an annual rate of 8 per cent, according to Nationwide. However, this is nothing compared to the reduction in buying activity, which has fallen off a cliff in recent months. In June last year there were 105,000 homes sold in England and Wales. In June this year, just 17,681 sales were registered, a fall of 83 per cent. In more than a third of postcodes, there were no sales at all.

...

Timesonline

Big job losses to come in estate agents methinks .....there are 17 alone in my local high street

Darling is considering cutting stamp duty ....he had better consider by tomorrow , otherwise all buying will stop completely ..... Genius ........ should have done it , not talk about it .....

just for the under £300k purchases ......but

Accountants at the Treasury will probably not be happy about the idea. The public finances are already in a perilous state and the Government has become increasingly reliant on stamp duty over the last 10 years. Between 1997 and 2007, revenue from the tax increased by 582 per cent from £675 million to £4.6 billion. Any move to suspend stamp duty would leave a large black hole in the public finances, which would need to be funded by more borrowing or higher taxes elsewhere.