Taxpayer Money put into Northern Rock: £55 billion; NHS Deficit: £1.3 billion

[Trevortt]

Despite putting at least £55 billion of taxpayer’s money into Northern Rock, and ignoring the NHS deficit of “just” £1.3 billion, the Labour Party regime’s attempts to use your money to bail out a company run by some of its larger donors, has come to naught.

Northern Rock announced losses of £585.4 million for the first half of this year as the number of customers falling behind with mortgage payments jumped sharply.

The recently-nationalised lender said its bad debts provision stood at £351.8 million as 1.18% of its mortgage book slipped to more than three months in arrears at June 30 - more than double the amount at the end of 2007.

Northern Rock’s executive chairman Ron Sandler said: “The external environment has deteriorated and the consequences of this for Northern Rock are increased credit losses.”

Northern Rock said the number of properties in its possession jumped from 2,215 at the start of the year to 3,710 at the end of June.

In a further sign of customers finding it harder to make ends meet, the lender also said it was increasing staff numbers in debt management from 185 to around 500.

Before running into funding problems last summer, Northern Rock was one of the UK’s biggest and most aggressive mortgage providers, advancing loans worth as much as 125% of home values.

But with house prices estimated to fall by up to 20% by the end of next year, tens of thousands of its customers could be left in a position of negative equity - where the value of the mortgage exceeds the house price value. That could make it difficult for them to find other sources of finance.

Northern Rock was nationalised in February after the Government failed to find a buyer for the business that provided “sufficient value for money to the taxpayer”.

* Could Brown’s obsession with Northern Rock be linked to the fact that that bank gave half-a-million to Labour’s favourite think-tank, the IPPR? It also employed Gordon’s personal pollster, Deborah Mattinson, as an adviser. Is this the reason that Brown gives priority to his friends, while underfunding the healthcare services of the British people?

Source

Northern Rock should have been allowed to go bust. They had an insane business plan - borrowing short and lending long. In other words, they lent out money for long periods of 20 years plus and funded it by borrowing on short markets of 3 months. It was inevitable that this plan would fail when credit dried up.

The fact that they were allowed to do this indicates just how lax the regulations are covering the conduct of financial institutions.