The shareholders are mostly opposed to a sale because they know the discount to value which will be gained by the buyer at their expense.

The view I continue to hold is that a free-market Conservative chancellor would not have put a more watchful regime in place, and I believe would have allowed the depositors to continue to queue. Not that that would have led to NR collapsing – it’s £100bn assets (mortgage book) prevent that even now – but a free-market approach wouldn’t have improved things.

It remains to be seen whether the BofE’s reserves are permanently depleted by this – I think not; you think so, and I think we understand each other’s view. In any event it’s hard to imagine the deposits being used to credit anyone other than the depositors, so I think the taxpayer’s fund is safe.

Northern Rock didn’t convert to a Bank until 1997, when it was listed as a PLC…by 1999 it was quoted on FTSE100!!

Its growth rate was double that of the sector. None of it occurred under a Tory Government-all of it under the Tripartite regulation system introduced by Brown when he gave BoE independence.
The FSA is badly at fault here-presumably Darling will review this aspect when he has offloaded NR’s debt.

Yes I agree that shareholders should accept the risk associated with their reward levels. I think they will suffer badly in this case.

NR’s funding comes fromo wholesale money markets whose supply has disappeared along with the profits of the world’s major banks. It is this approacjh to a banking collapse that has caused NR’s problem, not profligate lending. NR relied almost entirely on borrowing to fund its lending, whereas others rely on depositors’ accounts more.

Only increased scrutiny by the Govt/Bank0f E, FSA could have prevented NR getting into trouble over this, but they would have had to take action many years ago to prevent over-reliance on wholesale money markets. That level of scrutiny and control is anathema to Tory ethos, and that’s why Cameron is banging on about other matters and not this.

The Bank of England is wholly owned by the Government.

NR is not a “going concern”-it is technically insovent because it cannot meet it’s liabilities as they fall due.

The Banking system is not on the point of collapse.

Northern Rock’s generally criticised business model( excessive use of short term money market funding/100% plus mortgage loans/6x multiples/higher than average deposit rates) should have alerted the FSA ,to whom GB transferred banking regulation , when NRs market share & growth rocketed.

As we now know from the Select Committee hearings, FSA’s Chairman admitted they didn’t even follow NRs accounts.

When asked at the Parliamentary hearing about (GBs) Tripartite structure of National financial surveilance & regulation -”who is in charge?”-the Governor of BoE replied that he didn’t understand the question.

Whose is responsible for that shambles-you tell me?

NR most certainly are at fault for their failure -their board bears full responsibility.

THe Government designed the Tripartite regulation system & it failed in the first crisis it encountered.The result is that the Government is funding -in cash-to the tune of some billions of pounds, a mortgage company which it must now engineer a sale for in order to retrieve it’s loan and avoid honouring it’s guarantee to repay all depositors ( those that are left that is !!)

I can see little connection between this failure of Banking Regulation , and Black Wednesday. The latter was a prime example of the dangers inherent in a “one size fits all” interest rate/exchange rate policy applied to a bunch of disparate sovereign nation states.

I have no doubt that whilst it features highly in Labour’s catalogue of “bad things the Conservatives have done” it featured equally highly in Brown’s determination to keep UK out of the Euro.

The cost of Black Wednesday is estimated by The Treasury at £3.4 bn in 1992 .Following UK’s withdrawal from ERM the performance of it’s economy has been significantly stronger than that of the Eurozone , despite the damage caused to the economy in the short term.