John Moir, retired accountant and former financial
director of Lloyds of London, argues that the Northern Rock rescue plan is the biggest financial rip-off in history.
There are a lot of facts surrounding the Northern Rock disaster that are being withheld from the public, i.e, the taxpayer or, in its simplest term, “us”). These facts, some of which I will enumerate below, would be embarrassing to the Government and would probably scupper the latest ingenious plan (i.e, con) to get the Government off the hook. This does not excuse the official lies and deception.
First let me put my cards on the table. Northern Rock had a flawed business plan and tried to grow much too fast for its own good. When the fatal flaw was exposed by the credit crunch, it should have been allowed to go into administration or be liquidated. This would have hurt a lot of people and cost a few thousand jobs but nothing like the cost of the salvage plans now about to be foisted on the British public.
It appears that the taxpayer will be forced to guarantee bonds secured over the assets of Northern Rock (its mortgage book). The plan is for either the Government or a private buyer to run the bank in a subsidised way (subsidy also thanks to us) in the hope that it can one day become profitable, pay off the bonds, release the taxpayer from the guarantees and maybe even provide a small profit for the taxpayer. Dream on. None of this will happen and, what is worse, neither our Prime Minister, our Chancellor, the Governor of the Bank of England, the Financial Services Authority nor any self-respecting level-headed financial journalist believes it either.