- Somebody to buy Northern Wreck (as its being called)
- Scapegoats who range from the FSA, rating agencies, Bank of England, investment banks i.e. anybody but Northern Crock management
- Somebody with a good torch to follow all these derivative financial transactions around the banking industry so that everybody knows how much they need to adjust their accounts by.
Tuesday is the next key date-Lehman Brothers, a top 5 investment bank and one of the prominent players in the CDS and MBS (mortgage-based securities) markets announces its Q3 results...
2 comments:
I fail to understand how Northern Rock which lends to Britons has been caught up in the US sub-prime mess. Whats the linkage. Did they have lax lending standards?
Ssem, Northern Rock has few deposits. So it goes to the money markets/wholesale market borrows the 3 month-term funds and lends them to over 25 year periods. Because of the subprime issue, those who used to lend in the wholesale market are no longer willing to and certainly not to a mortgage lender.
The other things is Northern Rock was very aggressive (growing their mortgage book by 40% every year). So its borrowing requirements was bound to get outof hand and it has done so in a year when credit is less.
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