Northern Rock has long followed a model of borrowing short and lending long to fund it's growing mortgage business, which has so far provided the company with massive success. But the folk standing in the queues don't hear this.
To these folk, it doesn't matter that Northern Rock is looking at making at least £450m profit this year, or that the bank is otherwise in a financially strong position. It doesn't matter that Northern Rock, unlike Barclay's which was twice bailed out by the Bank of England last month, has yet to touch a penny of the Bank of England loan facility.
It also doesn't matter that, the more that people withdraw, the greater chance that Northern Rock will be taken over, which would mean massive redundancies in the North East's biggest finance industry employer. It doesn't matter that the loss of Northern Rock would also mean the loss of the Northern Rock Foundation, the biggest charitable giver in the North East, which could also mean goodbye to a number of local charities and good causes.
All these people see are the queues, and all they hear are the interviews with the headless chickens (although the rush to join the queues is more like a flock of sheep if you want to continue the farming analogy). To a large extent, the media herd has driven the events, starting with the BBC's misleading labelling of Northern Rock's request for the Bank of England facility as 'unprecedented'.
It's been interesting to follow the media coverage. Everyone with an opinion, including inveterate band wagon jumper Dave Cameron, has been falling over themselves to criticise Northern Rock or the government for not predicting this. Hindsight is indeed an exact science, but the reality is it couldn't be predicted. Of course there were risks in Northern Rock's model, but no one foresaw all the banks shutting their doors to short wholesale borrowers like Northern Rock. Normally, the banks loan money to each other, but Northern Rock and others were locked out by the liquidity freeze.
In a tsunami of silly media comment and downright stating the bleedin' obvious that has more in common with football than finance, the most idiotic comment award has got to go to ITN's annoying Chris Choi, who tonight called the queueing an "investor revolt", as if those people in the queues were on some honourable crusade, rather than a panic of self-interest.
Hopefully tonight's announcement by Alistair Darling will cool some heads amongst Northern Rock customers, quieten the nerves of staff and stave off a takeover, which would be disastrous for it's employees. And judging by the speed at which the queues dissolved when the rain started at 3pm in Newcastle this afternoon, here's hoping for a bit of bad weather to help restore calm.
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