GOLDMAN 555

I really have lost faith in the government.
Remember when the Northern Rock crisis was at its height the government and Northern Rock were both saying that all of your savings are covered up until £32,000 by some sort of underwritten scheme.
Well it turns out there is a slush fund to cover such an eventuality however it only has £250 million in it. And most of that would be sucked up by the initial £2000 which is one hundred percent guaranteed.
In short if Northern Rock would have gone pop most of the people would have lost all their money.
Maybe those people queueing to get their money out were not so stupid after all.
It has also come out that the collapse was very close to happening this is why the government stepped in and unconditionally guaranteed the money.
The government would have really looked stupid after saying the money was guaranteed and then 95% of the people with money in Northern Rock lost everything..............

David Lock

Not even this government would have reneged on their promise to guarantee that savers funds would be protected. dl

dpb

i would dearly love to know if this was indeed just political manoevering (sp)- well never know of course

Trout

iTrader: (1)

When HM made the underwriting commitment they had to put aside £10-14 billion. I think you have been misinformed.

lozgti

I reckon there is more to come....

GOLDMAN 555

I’m talking about the FSA’s bank account guarantee.

They guarantee to the first £2000 however there is a caveat on the following money up until £35,000. The caveat states that second tranche of money comes out of the FSA’s fund…………….. There is only £250 million in this fund.

The billions you are talking about from the Treasury. This was only offered after it looked like Northern Rock was going to collapse.

The government came out before the Treasury stepped in and stated that up to £35,000 was covered it wasn’t this is why the Treasury stepped in.

This whole situation was nearly extremely ugly for the government….

Leslie

Do you really believe that? They reneged on the pensioners who have lost so much because of their guarantees which turned out to be rubbish!

They have lied to us for the last ten years anyway!

Les

bugeyeandy

I think you missed the sarcasm in his post...

Miniman

iTrader: (2)

I think you're mixing two different guarantees and then blaming the government. Prior to the government stepping in, I saw numerous news programs and papers that stated the details of the FSA guarantees and that you may lose a % depending on your savings. I don't remember anyone from the government or NR saying this was wrong and your full savings were guaranteed? Put simply, I don't believe that any government would lie to this extent (I do agree that they get things wrong - but that's not the same as outright lying).

If you had savings in NR I would have thought you would have paid more attention than me to the details, espcially if it was all over the 6 o'clock news.

Luminous

iTrader: (3)

I remember it being clearly and endlessly stated that the first 2k were 100%, and the rest up to 35k were 90% secure. I never heard a mention that the total fund to pay this was only 250m.

The gov said there was no need to panic, clearly there was.

Trout

iTrader: (1)

I am with Miniman hence my earlier comments.

Mixing apples and pears and then accusing the Government of lying.

The problem with Northern Rock was not losing the savers money. It's business model was reliant on the securitisation of mortgage business in the capital markets rather than against savers cash (like the old Building Society model).

NR made commitments on new mortgages and because of the credit crunch was having difficulty in securitising the new lending for two reasons - the interbank lending rate went very high (LIBOR) and so the new business could only be written at a significant loss, and more importantly banks stopped putting new capital into the debt marketplace.

All of this has very little to do with savers deposits.

Leslie

I didn't actually, but it was a good excuse for a rant!

Les