The British government today unveiled its last-gasp plan to hand off the Northern Rock hot potato and prevent nationalization, the London Times reports. Under the plan, the bank would immediately pay back the £25 billion it owes the government by selling the debt to private investors as bonds. But since the government is backing the bonds, taxpayers are still on the hook if the Rock defaults.
In exchange for its generosity, the government intends to profit from any Rock rebound, though it wouldn’t say how. Private bidders have until Feb. 4 to make final offers. If no deal is completed, the bank will become publicly owned, and shareholders could end up with nothing, something one insider described as a “pistol to the head” proposition.