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Northern Rock Bailed Out!
By Bank of England

 7:57 am on Sep 14, 2007 (gmt 0)

Shares in one of the UK's largest mortgage lenders, Northern Rock, have fallen by 20% after the Bank of England decided to give it emergency funding.

But experts say it does not mean Northern Rock, which has 113bn in assets, is in danger of going bust.

The bank has struggled to raise money to finance its lending ever since money markets seized up over the summer.


Does anyone have a mortgage or savings there?

I have an online savings account that I couldn't access last night or this morning. They aren't answering the phones either.

All of the "experts" are saying that the bank won't collapse, but they probably don't have any money there!



 11:57 am on Sep 14, 2007 (gmt 0)

I would not be so sure..

Check this, they are locking customer out of internet banking:


Also there are reports of queues dow the street of people pulling their money out. If I was you I would go and join them. Rats and sinking ship.

[edited by: Crush at 11:58 am (utc) on Sep. 14, 2007]

Lord Majestic

 12:29 pm on Sep 14, 2007 (gmt 0)

That's a very bad sign, and this situation is not going to be limited to just NR customers...


 12:30 pm on Sep 14, 2007 (gmt 0)

I know Crush...I have been trying to log into my account all morning. They are locking people out of moving their money :(


 12:35 pm on Sep 14, 2007 (gmt 0)

Is this our fault (USA) with the weak dollar?


Is there nothing like the Federal Deposit Insurance Corporation (FDIC) in the UK that insures your money up to $100,000.00US?

[edited by: Marshall at 12:36 pm (utc) on Sep. 14, 2007]

Lord Majestic

 12:45 pm on Sep 14, 2007 (gmt 0)

For private depositors money are insured for up to 30k GBP (or something close to that). The main problem is that if NR crashes then it would certainly affect property market that is really overdue for big crash.

I don't think this is the fault of the USA - speculants exist everywhere. The responsibility for this is on the Labour Govt in the UK - it was them who encouraged people to get even more in debt on the basis of ever-increasing house prices.


 1:08 pm on Sep 14, 2007 (gmt 0)

Sounds like the same thing that is developing here: excessive loans to people whose credit worthiness is questionable at best. Sadly, there like here, it will be the little people who suffer, not the CEO's and CFO's and all those other three letter positions. I can think of three letters to apply to these people, but I think posting it is against the TOS.

Anyway, best of all to all of you. Hope it works out in the end.



 1:25 pm on Sep 14, 2007 (gmt 0)


Good day to go and mug old people don't you think? Taking out their life's savings ;)


 1:28 pm on Sep 14, 2007 (gmt 0)

One man had been waiting so long for his money that a tree grew around him ;) (see pic in above link)


 1:29 pm on Sep 14, 2007 (gmt 0)

Marshall, it's actually hurting the big guys right now too. That money that isn't being paid back came from them.


 1:29 pm on Sep 14, 2007 (gmt 0)

Yeah, I thought he was magneto from the X-Men :)


 1:34 pm on Sep 14, 2007 (gmt 0)

Hi all,

Northern Rock has borrowed the money in order that it doesn't go bust and the bank of england are going to do their best to ensure that the bottom doesn't fall out of the uk market so rest assured we should be ok.

The problem is indeed caused by the situation in America and its nothing to do with over zealous mortgage lending here in the UK. A lot of our companies here are funded by American investment banks etc and as the market is unstable in the US at the moment investors no longer want to invest in mortgages which until recently was a safe bet for them.

If a companies business is lending, which NR's is then it needs to be lending to be profitable. If the company that NR lends the money from to do this no longer wants to lend the money NR either goes bump or it asks for help elsewhere.

Unfortunately panic will set in which only upsets things even more, so if NR were to go bust that could well be the beginning of something far worse for the UK - which is why the bank of england is helping. We need to sit tight and keep calm and not panic and bring about a situation which is worse for ourselves. You will be ok.

The websites probably suffering because all of the customers are trying to access it at once - your money/mortgage/loan will be fine.


 1:50 pm on Sep 14, 2007 (gmt 0)

Northern Rock should be fine they seem to be a reputable company with good financial lending practices .

But if any other finance institutions are forced down the same route there could well be a major knock on effect not with the safety of peoples savings or mortgages but with much tighter consumer credit leading to other effects causing a down turn in the economy

The UK and US banking industries and government have some great protection in place in case of these problems to stop the banking industry collapsing so savers money will be safe

The Economy may not be



 3:08 pm on Sep 14, 2007 (gmt 0)

much tighter consumer credit

I would imagine this is a good thing.


 3:14 pm on Sep 14, 2007 (gmt 0)

Is this our fault (USA) with the weak dollar?

The Newcastle-based group admitted it had got caught up in the world credit turmoil triggered by the sub-prime mortgage market crisis in the U.S.

Of course "we" are responsible. Where else does the schit start and then go downhill from there?

I love my country and everything but I do feel for those who are impacted by the decisions our Government makes on a daily basis.

I was just talking to a mortgage brokerage firm the other day. They have about 30 employees and most of them are wondering when the hammer is going to come down. Many are without leads which they are not used to.

Things are going to get much worse before they get better. Damn mortgage brokers, how do you sleep at night knowing that you're possibly partly responsible for all of this?


 3:28 pm on Sep 14, 2007 (gmt 0)

Not sure what the government has to do with it other than bringing the prime rate back from all-time lows. Mortgage brokers and borrowers who both knew they were getting in above their heads brought this on.


 3:45 pm on Sep 14, 2007 (gmt 0)

I love how nobody every blames the person who took the mortgage they should have known they couldn't afford...


 3:54 pm on Sep 14, 2007 (gmt 0)

I love how nobody ever blames the person who took the mortgage they should have known they couldn't afford.

I'm sure this could become an very heated subject. I think we all know the blame lies at the end of the paper trail, which is normally the consumer. In this instance, there is much more blame to be spread around at all levels, not just the consumer.

In the US, many ARMs (Adjustable Rate Mortgages) are responsible for the current trends in the real estate industry. In 2007 August, that entire industry began its spiral downward when the market took an 18% hit in one day after announcements from Fannie Mae. It hasn't recovered since then.

Independent Real Estate Agents
Black Friday 2007-08-03

[edited by: pageoneresults at 3:59 pm (utc) on Sep. 14, 2007]


 3:58 pm on Sep 14, 2007 (gmt 0)

p1r, I know it's the same problem in the US, but I know when I took my mortgage, what the bank said I could afford, and what I knew I could were different things, I had to look at the reality of what my expenses were each month and what I could realistically afford and purchase accordingly.

I just can't see many of the people who are in tight because of the mortgage they took taking responsibility for it on there own, they'll blame the bank, gov't, anyone but themselves.


 4:11 pm on Sep 14, 2007 (gmt 0)

they'll blame the bank, gov't, anyone but themselves

No, it's blame them all. The government should have better control, the banks should not offer large loans to people with questionable credit history/ratings and income, and the individual should know better. I am waiting for the next bust - thesse "reverse" mortgages. Sounds too good to be true and really only benefit the banks in the end, IMHO.



 4:25 pm on Sep 14, 2007 (gmt 0)

Marshall, I should have added, that yes, everyone is to blame, but for their own situations.

The banks are to blame for their situation, had they not extended loans to people with bad/poor credit, they wouldn't be stuck where they are. Though, then the people wanting loans/mortgages would complain because they can't get one!

The people who can't repay their debt are to blame for not being able to repay their debt. They took it on, they should be responsible about it. And if they couldn't handle it, shouldn't have taken it in the first place.

The gov't should have controlled interest rates better so that banks didn't think they could get away with extending credit to people who couldn't handle it.

Ultimately though, it's the people that pay...one way or another. As bailing out the company just costs more in taxes.


 4:40 pm on Sep 14, 2007 (gmt 0)

I don't think there is a suggestion that Northern Rock is particularly exposed to bad debt, either in the UK or US. Its problem seems to be that its business model is to borrow from the market to lend to its customers. With the credit crunch it is having problems doing so, hence asking the Bank of England for a loan.

I'd be more worried if I owned Northern Rock shares than a Northern Rock deposit account.

Lord Majestic

 4:43 pm on Sep 14, 2007 (gmt 0)

I love how nobody every blames the person who took the mortgage they should have known they couldn't afford...

They will be the first to suffer and will suffer the most. Some of them were certainly lied to and did not read the small print.


 4:56 pm on Sep 14, 2007 (gmt 0)

My rant!

The bottom line problem with all of this is too much credit and the gotta have it now mentality. Even if you read the fine print, everyone draws you in with teasers. You all know the signs in the stores:

ONLY $15/MONTH OF YOUR REVOLVING CREDIT - NO INTEREST UNTIL DOOMS DAY, etc., etc. The problem is, those $15/month add up and people do not look at the BIG PICTURE. Sure, you are paying $15/month, but on how many items? And what is the total cost of those items? $1k, $2k, $5k, more! No one ever looks at the total. Throw on top of that the adjustable rate mortgage that suddenly balloons. And of course, who puts away "rainy day" funds any more.

And then there are the mailings PRE-APPROVED $8,000 LIMIT from dozen of banks who never check who else sent the same thing, so suddenly, you have five, ten, twenty credit cards totalling $50k, $100k or more. Personally, I had over $250k in credit cards, but I am glad to say I got rid of them all and my only debt is my mortgage. Best thing I ever did. heck, the savings on interest alone is well worth it, but try to explain that to the average person. Never Happen!

And let us not forget the bank that offered you the interest rate of 9% who, if one paymnet is late, jacks it to 29%, or more, plus adds a late fee AND, if you read the fine print, you discover that your other cards can raise their rate if you are late on any type of credit payment, including utilities.

There is one word that sums it all up: GREED!




 4:59 pm on Sep 14, 2007 (gmt 0)

Direct result of ninja loans? No doc loan? No job? No income? No assets? No problem...

Not sure about the falling dollar but sub prime debt being sold to hedge funds and speculators around the globe just seems like a recipe for disaster. One word comes to mind. Greed.

<added />LOL Seems I agree with you Marshall.


 11:12 pm on Sep 22, 2007 (gmt 0)

While there is a lot of blame to go around, I think the reason this thing ultimately came about was because there was demand in the marketplace from hedge funds, from pension funds and other places for high return, "low risk" investments.

Wall street had a massive market for things like these so when there is a huge demand for something, someone will try to produce it.

Take US subprime housing market, lower the docs & requirements to get a loan, roll up the loans in a bunch in CDOs, segment into different tranches, assign risk to them and sell these "opaque" assets to people who have no business buying them (hedge funds, pension funds, etc...) and couldn't even hope to understand them - not sure anyone really understands where the risk is at this point or who is holding the next time bomb.

If there was no way to sell these loans and get them off the books, if anyone in the chain was responsible for anything, this bubble would not have happened.

In order for all these bogus loans to get approved and move through the chain, everyone has to believe that there will be some bigger fool at the end of the line to buy the securities that resulted from them.

Now there there isn't and the housing pyramid scheme of YoY 25% - 100% real estate price appreciation is over and there is nothing to fuel it, keep it going or prop it up.

Lookout below and get a great deal on a house in the not-to-distant future if all your other assets have no evaporated.


 5:01 am on Sep 23, 2007 (gmt 0)

I love how nobody every blames the person who took the mortgage they should have known they couldn't afford...

In most cases it's not that they couldn't afford it, it's that they saw a chance to save a little extra by taking an adjustable rate mortgage instead of the much more sensible option of a full term fixed rate. When you're talking about the biggest purchase of your life, the house and home for you and your family, it's not time to start gambling that rates will stay low for the next 25-30 years - it's about knowing exactly how much you need to find each month, every month, and then being sure to do so.


 11:41 pm on Sep 23, 2007 (gmt 0)

I love how nobody every blames the person who took the mortgage they should have known they couldn't afford...

The cause of the problem isn't middle class borrowers.
The problem is dirt-poor Americans either on minimum wage, or with no jobs, or no regular income, who were sold mortgages with very high interest rates. There are allegations of widespread fraudulent and unethical practices in the marketing of these mortgages. They're euphemistically called "sub-prime" mortgages because they were given to people who really had no business getting a mortgage. Suits with glittering teeth selling the American dream to those who had never had a glimpse of it.
Wall street didn't care. Those super-high interest rate packages were snapped up and marketed as the next get-rich-quick scheme. "Roll up! Make money off uneducated poor people!"
That caused more money to flow back to the lenders, who went and recruited as many people into signing as many of these things as they could. The whole system expanded as more and more people wanted to invest in the "sub-prime" action.
Now the chickens are coming home to roost.
Turns out that when you sign a poor person up to a punishing, high-interest loan, there's a good chance they'll default.
Who'd a thunk?


 4:22 am on Sep 24, 2007 (gmt 0)

Last night, there was a program on the sub prime mess in the US. They were showing a family of 6...mama papa and 4 kids in their home.... They had bought a huge house with a swimming pool, two large cars and a large boat...everything on loan. And now, he was worried about paying for the family basic needs, foods, eduction and health. You guess whose fault was it? The family or the bank/lenders?


 5:17 am on Sep 24, 2007 (gmt 0)

You guess whose fault was it? The family or the bank/lenders?

Both. And both will pay.

This 35 message thread spans 2 pages: 35 ( [1] 2 > >
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