Northern Rock

[Snoopy]

I don't think they use Pigs' Bladders anymore Nick but in principle ~ yes.

[Grumpmeister]

This is starting to look even worse for he taxpayer. If all that is going to be left of Northern Rock is the dregs of their business then the total cost could go through the roof. 

Clashes are expected later in the House of Lords as peers debate the nationalisation of Northern Rock.
It comes after claims in the Commons the government was only taking over the "rubbish" from the mortgage book.

The part which takes the best mortgages and resells the debt will not be taken into public ownership, MPs were told.

Lib Dem spokesman Vince Cable said a firm called Granite had been "hived off" from Northern Rock with many of the best mortgage loans.

Mr Cable said: "The problem is that Granite is a separate institution which, as I understand it, securitises the best assets of the bank.

"The best mortgages of the bank are wrapped up in the Granite vehicle."

'Asset-stripping operation'

He said chief secretary to the Treasury Yvette Cooper appeared not to know what was happening to these mortgages.

  We now need to have a very rapid and thorough explanation of exactly what's gone on here because this could be stopped in the House of Lords unless there's a proper explanation

Vince Cable
Lib Dem treasury spokesman

During an emergency Commons debate on the bill to nationalise the bank, Mr Cable said: "What we are now being told is that in some way this has now been hived off to the benefit of a person or persons unknown, apparently, to the minister.

"What is going on here appears to be not public ownership of Northern Rock but an asset-stripping operation designed to benefit whoever, we don't know. This is a very serious development."

He said the remainder of Northern Rock's assets, which have been acquired by the government, consisted of unsecured mortgages for up to 125% of the value of a home.

'Ping pong threat'

Mr Cable added: "We now need to have a very rapid and thorough explanation of exactly what's gone on here because this could be stopped in the House of Lords unless there's a proper explanation."

The Lib Dems support the nationalisation of Northern Rock but they will call for more time to debate it if the government does not provide a better explanation later when the emergency legislation comes before peers.

The government could then be faced with the prospect of the bill 'ping ponging' between the Lords and Commons on Thursday - the deadline minister have set for getting it on the statute books.

Jersey-based Granite, which was set up in 1999, is a securitisation vehicle through which mortgages are parcelled up and sold to investors.

It is thought to hold about £45bn of Northern Rock assets, about 40% of its business, but there are potential legal obstacles to its nationalisation, including the fact that is based offshore.

MPs have also expressed concern that - under Granite's structure - investors could call in their loans if mortgages are not continually replaced by new ones.

Conservative MP Philip Dunne said this left "a gaping hole" in the nationalisation programme, potentially putting taxpayers at a much larger risk than previously claimed.

But Ms Cooper insisted the government had made the position on Granite clear and taken everything into account and that taxpayers would not be made to the foot the bill if it collapsed.

"It is a separate legal entity, it will not be covered by the order - but equally it was not covered by the government guarantees and we have made that clear from the beginning," she said.

'Rubbish assets'

But former Conservative chancellor Kenneth Clarke persisted: "The best assets are in Granite.

"It looks as though there is a contract enabling more assets to be drawn in and it is the rubbish in the assets that we are now nationalising."

Emergency legislation to nationalise the stricken bank was rushed through the Commons in a single day on Tuesday.

The Banking (Special Provisions) Bill was given a third reading by 293 votes to 167 despite Conservative opposition.

If passed, the legislation will put the troubled bank into what the government has described as temporary public ownership.

The action comes after the bank ran into problems last autumn amid the US sub-prime lending crisis and the global credit squeeze.

Ministers opted for public ownership of Northern Rock after rejecting a bid from a consortium led by Sir Richard Branson's Virgin Group and a proposal from the board of Northern Rock.

[Snoopy]

It looks like they've cocked it up again.
When will politicians (particularly Labour ones) realise that for all their ministerial cars and perks, posh offices in London, syncophants hanging on their every word and a press that builds them up to look important they are, in reality, still only failed solicitors, teachers and trades union officers who are elected for five years. They have no financial training and very little training for anything else. If they were any good at anything or even half as good and clever as they think they are then companies would be paying them a damned sight more than they currently earn.
They are not and never will be a match for the hard nosed business types in the city who run rings round them everytime.

[Barman]

Bastards! 

[Snoopy]

Does rather blow a large hole in the myth of the "Solid North Eastern Values of Honesty and Integrity with only the customers interests at heart" routine they've been peddling for years doesn't it.
Wonder what all those twats who have appeared on the TV Vox pops claiming that "It's t'rock o t'north etc" feel now that the truth is coming out and that their reverred "local trustworthy building society" was always a vehicle for off shore, tax avoidance schemes and dealings based on the savings of honest folk but designed to make a select few very rich.