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24 comments on The Finance Round-Up: September 28th 2007

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Stoneleigh on September 28, 2007 - 8:54am Permalink | Subthread | Parent | Comments top

Thanks for posting that Burgundy. All too often, bailouts only serve to pay off the well-connected when problems emerge, leaving the rest holding the empty bag. IMF country bailouts are a case in point (see for instance And the Money Kept Rolling In (And Out) by Paul Blustein in relation to the financial crisis in Argentina).

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Burgundy on September 28, 2007 - 4:43pm Permalink | Subthread | Parent | Comments top

Northern Rock's bailout is becoming increasingly bizarre and the Bank of England trashing its own reputation even more so. I can only assume that the situation is so bad that the BOE has no alternative but risk itself and the entire financial system in a reckless effort to avoid meltdown:

Northern Rock refuses to tighten lending rules
http://business.guardian.co.uk/markets/story/0,,2179625,00.html

Mortgage brokers said the ailing Newcastle-based bank also continued to sell its controversial 125% mortgage and personal loan package.

Most lenders have tightened their lending rules in the aftermath of Northern Rock's bailout by the government more than a fortnight ago. Sub-prime lenders that target home buyers with poor credit histories have scrapped much of their riskier lending in recent days while most mainstream banks and building societies have targeted safer customers with higher credit scores...

...Northern Rock sales staff can sanction mortgage offers of more than five times earnings to customers with salaries of £100,000 or more. If the customer agrees to a five year fixed rate deal they can qualify for a loan worth six times their income, said mortgage broker London & Country.

Northern Rock's shares dropped 7% to 179p today on news that its overdraft with the Bank of England had ballooned to almost £8bn. Some experts said it could be expected to breach the £10bn barrier within days.

"By Jove we're still afloat. Full steam ahead and try not to hit any more icebergs!"

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