It would be great to live a world where there is an institution ready to hand out limitless amounts of money when we make excessively risky investments that went wrong.
Oh happy day, at least some for some lucky people; they live in this world already. Potential investors in Northern Wreck want the Bank of England to forgive a £2 billion interest rate charge on the Bank of England £20 billion bailout loan.
There was a simplier and cheaper way of dealing with this problem. The moment this bank started to default on its obligations, it should have been declared bankrupt. The value of NR shares should have been wiped out; the assets should have been sold, and from the revenues, the workers should have received compensation packages. The rest should then have been returned to the depositors.
It would have been a simple, clean and fundamentally honest way of dealing with the problem. It would have also served as a timely reminder to others who make excessive gambles that some investments can go wrong and money can be lost.
Instead, the taxpayer is looking at taking a hit of £2 billion. So who is taking responsibility for this loss? Just as I thought - no one.
(Guardian) Potential bidders for Northern Rock are pressing the government to waive a £2bn interest bill on the stricken bank's outstanding £20bn loan. Their representations to the Treasury mark the opening skirmish of what could prove to be a politically damaging battle for control of the bank.
Bidders are arguing for more lenient lending conditions to Northern Rock in return for safeguarding valuable jobs in the north-east of England. One bidder has already highlighted the benefits of its bid for the job prospects of the bank's 5,500 workers in Newcastle and Sunderland.
Northern Rock has set a deadline of Friday for all interested parties to submit their proposals. Sir Richard Branson's Virgin Group and three private equity firms have indicated they might bid for the bank, though none of them have released details of their plans. Northern Rock's advisers have also canvassed another 50 potential investors, including some in China.
The government has been trying to secure a buyer for Northern Rock since it had to be rescued by the Bank of England in September. Since then, Northern Rock has borrowed close to £20bn from the Bank at a penal rate of interest believed to be close to 7%.