kirovman
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The bank, Northern Rock (which behaves more like traditional building society) has lost 32% value in shares today following news that they had to apply for a "Last Resort" loan from the Bank of England, which is 1% above the interest rate, so quite high rate for a bank.
It has been noted that the BoE wouldn't lend to them if there was a significant danger that Northern Rock would fold.
This is because Banks have ceased lending to each other through inter-bank loans, because of the uncertainty with the Sub-Prime loans crisis which is gripping the US, and Northern Rock is more susceptible to this because of the way they conduct business.
Shareholders have suffered the most, evidently.
Savers are fairly safe, if they have less than £32k saved, because the FSA would compensate the savers for most of the losses incurred if the bank goes bust.
Mortgage holders may face higher interest rates as a result, but nothing drastic (like not having to pay back the mortgage!), and interest rates are going up across the board anyway.
Is this going to happen to other banks? How many other banks can the Bank of England bail out? Is a house price crash coming, in association with a global recession?
Or is this just an inconvenient blip?
Maybe another war can boost our economy - look out Iran!
Gordon Brown as former Chancellor has always promised that boom and bust economy is a thing of the past. It will be interesting to see whether we can hold him to his word.
It has been noted that the BoE wouldn't lend to them if there was a significant danger that Northern Rock would fold.
This is because Banks have ceased lending to each other through inter-bank loans, because of the uncertainty with the Sub-Prime loans crisis which is gripping the US, and Northern Rock is more susceptible to this because of the way they conduct business.
Shareholders have suffered the most, evidently.
Savers are fairly safe, if they have less than £32k saved, because the FSA would compensate the savers for most of the losses incurred if the bank goes bust.
Mortgage holders may face higher interest rates as a result, but nothing drastic (like not having to pay back the mortgage!), and interest rates are going up across the board anyway.
Is this going to happen to other banks? How many other banks can the Bank of England bail out? Is a house price crash coming, in association with a global recession?
Or is this just an inconvenient blip?
Maybe another war can boost our economy - look out Iran!
Gordon Brown as former Chancellor has always promised that boom and bust economy is a thing of the past. It will be interesting to see whether we can hold him to his word.
