Tuesday, August 05, 2008

Heads Should Roll In Rock Scandal

Calls for legal action against Northern Rock directors doesn't go far enough. Members of financial watchdog, the FSA and government ministers who just sat back and allowed the whole sorry mess to happen, should be forced to quit in shame. 

The scandal is beginning to unravel, with a staggering half a billion pounds loss announced by the now nationalised Northern Rock and £3 billion of taxpayers cash to be pumped in to shore up the company.

The bank and building society's big wheeze to make a fat profit from mortgages and loans started years ago.

The government, Bank of England and the FSA turned a blind eye, while the money lenders changed the way they dished out the money. 

Instead of traditional financial checks on income and what you could afford, they switched to a risk assessment. 

Anyone could have a mortgage. The risks were bundled up and sold off. Big profits all around. Until the money to buy the bundled debt dried up. 

Northern Rock had given loans worth as much as 125% of home values, to some customers. 

But Northern Rock was just the tip of this iceberg. The financial mess was about to go pear-shaped. 

LibDem, Vincent Cable, has called for legal action against the private directors and warned the £3 billion of taxpayers' money is at risk.

The Rock also revealed customers in arrears and being repossessed, had risen sharply. Last week it announced 1,300 jobs were to go.

It was all an accident waiting to happen leaving taxpayers, now to cough up, pay for the greed and clear up the mess.

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