Northern Who?

Why is Northern Rock being treated so well? Had it collapsed under the weight of its directors' business plan that would have been unfortunate for depositors and shareholders but hardly more than a mildly embarrassing pimple on the financial face of the UK. Their mortgage book is sub prime all on its own - look at the offer only days ago to an undercover reporter of a 125% mortgage at a multiple of six times his salary - if their mortgages are all like that there is little to do with the US sub prime market causing their problems.

Yet the one- offness of their improvidence was obscured under a lot of flim flam about exposure to world problems and linkage pulling in other (unnamed) financial institutions and the need to act; while the Bank of England saw no need to act at all, not for that 'bank' anyway.

Still the Labour regime warped the entire policy of the 'independent' Bank of England and displayed the inadequacy of the FSA's monitoring function to prevent a small provincial bank going to the wall.

So who are Northern Rock, to be defended by Labour with such intransigence ? Why did our guest who had returned to remove life savings and inheritance from a deposit account, not unnaturally more than flustered by the queues and the worry, on meeting a banking neighbour get told: 'They'd never let NR go down, no need to have come back at all'. The mind turns to the geographical identity of Northern Rock's home ground .

During the last miners' strike Northern Rock is said to have assured miners not to worry about their mortgages and payments; there is an identity of 'mission statement' from the Northern Rock Foundation (which benefits from a large subvention annually from NR as well as its initial endowment on demutualisation), and the National Union of Miners commitment to defend the interests of miners, their extended families (and seeing as there are hardly any miners now that's quite an outreach over more than a generation), and their 'communities' (surely those have dissolved quarter of a century after the industry collapsed?).

'The Treasury has been ambiguous about how long its guarantee supporting Northern Rock is for ' , says the Telegraph, as profit- taking on share volatility continues. The depositors have got their savings out with the help, as of yesterday, of £ 13 billion of government loans (and we will be last in the creditors' queue, the money is gone, and yes, they can print it but that doesn't help the inflation spread across us all); why were preference shareholders not given their 3 weeks notice so that their dividend was delayed as it could have been - they have trousered their £40 million. What is tax-payers' money being used to prop up exactly, in Labour's heartland?

"the government has become complicit in large-scale and irresponsible lending by the same management, even today, in what amounts to little short of a banking scam," said Vincent Cable, the Liberal Democrat Economic spokesperson. “Are you aware that the same lending practices are continuing today?” Lord Oakeshott of Seagrove Bay, a member of his Treasury team, had rung Northern Rock the day before, reports the Times, to ask about a mortgage. “The terms were quite extraordinary. He was offered 127 per cent of the value of the house, including a roll-up of the arrangement fee, and five to six times his income,” noted Vince, adding, “30 per cent of the loan was going to be unsecured”.

Over 1% of GDP taken up in less than a month and more available . Who are these people?

Continued:

On Wednesday, the Northern Rock Charitable Foundation appointed Europa Partners, the independent corporate finance house, as adviser.

The foundation gets 5 per cent of the bank’s pre-tax profits. ‘It will receive a stake of just below 15 per cent of the fully diluted equity capital should the bank be sold.’ reports the FT.

'... the Northern Rock Foundation warned against a transaction conducted on “unfavourable terms, simply to meet a self-imposed timetable”. It plans to lobby other investors to ensure any offer is fair.’

The charity, created when Northern Rock demutualised in 1997 , the year of the New Dawn, has received £192m so far and disbursed £156m. Its activities are focused solely on Northern Rock’s heartland, north-east England .

‘Its spending over the decade has, Northern Rock believes, made it the UK’s biggest corporate donor and more than half the region’s voluntary bodies have received support from it.'

They offer a £60, 000 annual North East Writer's Prize, (amongst a veritable sea of grants for those who can cram themselves into Kinnock's famous categories of what not to be) , only you'd have to live there. Thought not.

Why don't we own Northern Rock? After all, we've paid over £13 billion so far and nobody but the Leader and his Treasury value it at much more than half a billion pounds.