UK To Introduce Sweeping Bank Reforms

Pundits examine the fallout of unavoidable nationalization

(NEWSER) - The subprime crisis has forced the British government to do what it dreaded: nationalize a bank. What's the fallout from the Northern Rock takeover?

• Gordon Brown "put quite a good face" on an unpalatable decision, says Philip Stephens of the Financial Times. Nationalization hasn't hurt him much, but the dithering has. Result: An election is probably years away.

Deal pays back government loans, but public still on the hook

(NEWSER) - 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. More»

Cost of drastic rescue package could top $800B

(NEWSER) - The British government will become part owner of the nation's biggest banks with a mammoth $88-billion rescue package for the troubled institutions, the Wall Street Journal reports. Under the plan, swiftly assembled after UK bank stocks plummeted in trading yesterday, the government will purchase non-voting shares in eight of the largest banks as a way to provide extra capital to the institutions. More»

Bank crisis spells political trouble

(NEWSER) - 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. More»

UK is extra vulnerable to the credit crunch

(NEWSER) - The US credit crisis is sending Britain's buy-now-pay-later economy into apoplexy, with Brits lining up by the thousands outside branches of troubled bank Northern Rock to withdraw their savings in spite of an unprecedented government bailout. Analysts say that the nation's borrowing habits leave the economy vulnerable. "I think we are at tipping point," one consultant tells the Guardian. More»