In Britain the meltdown of Northern Rock has expanded into a full-out political crisis. The bank's stock plummeted 40% this morning to trade at less than a dollar a share, the Financial Times reports. The collapse of Northern Rock spells serious trouble for Alistair Darling, the chancellor, who is desperate to ensure that $80 billion in taxpayer-backed loans to Northern Rock will be repaid.
In a speech yesterday Darling vowed to block any sale of Northern Rock that did not guarantee the repayment of treasury loans. But all the offers for the drowning bank have been aggressively low, and most of the prospective buyers don't want the whole enterprise. As Darling faced off calls to nationalize Northern Rock, Gordon Brown, Labour's steward of the economy for 10 years, was conspicuously absent.