Northern Rock (the 100% state owned bank) announced a 24% increase in half year losses to £724M today.
Seemingly the number of bad loans tripled in six months. Maybe enticing people into borrowing 125% of a property's value wasn't such a good idea?
It reported that 3.92% of its mortgages are in arrears. The national average of mortgages in arrears is 2.39%.
Quite where the FSA was, and what it was doing, whilst the then board of Northern Rock were destroying value is anyone's guess.
Northern Rock remains a monument to the failure of the FSA and the tripartite regulatory system created by Brown.
I agree it is a failure and possibly should have been left to fail but can I point out one simple thing?
ReplyDeleteIf a bank takes on far more of the sub prime mortgage market than any other bank then OF COURSE their defaulted mortgages rate will be higher.
Sub prime, by its very nature, is for people who CANT REALLY AFFORD the damn mortgage in the first place.