More people need to question ......

[Cyberman]

... why HMG decided to ignore at least 4 offers to purchase Northern Rock and decided to nationalise the company, when the Rock was one of the very few that had absolutely no US subprime, which has been the whole cause of the current crisis.

The offers were from:

1) Lloyds TSB that has now rather ironically buying HBOS, who made an offer PRIOR to the run on the bank of approx 4 pounds a share

2) Branson (who is now writing a book that also questions this decision!!)

3) A management buyout team

4) An american financier who withdrew when HMG change loan repayment terms at the last moment !!



After leaking rumours and thus causing the run, HMG decided to nationalise, with Darling stating that any upside should go to the taxpayer. It is pretty obvious from this statement that HMG expect to make a profit on this deal, otherwise why refuse all of these above offers!!

Branson has apparently put details in his new book that will embarrass HMG. Plus there is a Judicial Review in January 2009 which is pushing for full compensation to Northern Rock shareholders.

Interesting times !!

[Bob Dalek]

Read Branson's POV recently: sounds like heads are going to roll!!!

[Cyberman]

Basically it is an attempted stealth tax on Northern Rock shareholders armed with BBC propaganda thanks to Robert Preston. Taxpayers still believe that they have each paid the Rock almost 3,000 pounds, which is just plain rubbish.

The Rock has already repaid almost 10 billion pounds in 10 months by reducing its mortgage book, but I have seen recently that it is now offering competitive mortgages..... this does not make sense and shows a total about-turn in policy and negates the reason for nationalisation.
The outstanding sum of 14 billion pounds approx. was due to HMG/BofE anyway, because that is almost the total value of deposits lost due to their incompetence in spreading rumours and causing the run.

[TimberWolf]

Whatever the solution, rest assured that those with power and wealth will not be affected by the current crisis. At least not in a negative way.

[Cyberman]

Something else that I should add is that after all of the shenanigans, HMG are trying to get Norther Rock valued as if it was bust, in other words as if no BofE loans had been forthcoming, but the Rock was not bust and had at least 4 offers to buy it.

In view of all the loans given without question to other banks(approx. 100 billion so far and rising) since the Rock was unfortunately the first bank to request a loan and was initially refused, I trust others will see that this is grossly unfair.

[BlasterBates]

no Northern Rock didn't have any US subprime but plenty of UK subprime so they couldn't get funding. The fact is they financed the whole thing by borrowing themselves, and other banks because of subprime weren't prepared to lend to Northern Rock at all. Building Soc's used to balance deposits with mortgages and if that were the case they'd still be in business, but probably house prices would be about 70% of what they are today and there wouldn't be as many borrowers.

[Bob Dalek]

no Northern Rock didn't have any US subprime but plenty of UK subprime so they couldn't get funding. The fact is they financed the whole thing by borrowing themselves, and other banks because of subprime weren't prepared to lend to Northern Rock at all. Building Soc's used to balance deposits with mortgages and if that were the case they'd still be in business, but probably house prices would be about 70% of what they are today and there wouldn't be as many borrowers.

Hmmm. US subprime <> UK subprime.

[ChimpMaster]

Is Branson's book out yet?

[Bob Dalek]

Is Branson's book out yet?

Dunno. I can't stand him, but I will definitely buy a copy.

[AtW]

no Northern Rock didn't have any US subprime but plenty of UK subprime so they couldn't get funding.

The problem in my view was idiotic structure of NR and some other "banks" - ok, they stopped getting funding, what's the problem - stop issueing new morgages, fire all sales people and start counting money from existing morgage base (or losses from defaults). The real problem was that those clowns used shady offshore entities that required them to buy new morgages all the time! Now that became a problem as soon as funding dried up - whoever signed such contract should be in jail already, alongside those who created it in the first place (probably the same person). I'd throw into the same cell with those guys and guy named Rock also Cyberman for his inane rumblings on subjects he does not understand.