More disturbing news about Northern Rock: the British mortgage lender which had to be saved from collapse after being besieged by depositors who wanted their money back.
It has been revealed it continued to give people high-risk loans for months after the Bank of England gave emergency support. The UK’s public spending watchdog, the National Audit Office, found many of those loans – for 125 percent of the value of the property – ended in repossessions as the property bubble burst. Peter Gray, of the NAO said: “Those are mortgages that are most likely to be a risk of default and to get into difficulty. So, we are saying, the Treasury, when it gets into these sorts of situations, needs to think far more systematically about what risks are there and whether it can mitigate those risks if the taxpayer’s interests are at stake.” The National Audit Office also said the government was aware of potential shortcomings in plans for dealing with a bank in trouble as far back as 2004 but did nothing. British Premier – and former finance minister – Gordon Brown rejected the criticisms.