Northern Rock is the banking failure that just will not go away. Today, the Office of National Statistics announced that the growing pile of guarantees will have to be placed on the government accounts.
So far, the government is down a cool £90 billion. Furthermore, this newly acquired liability has pushed government debt up by 6.7 percent of GDP, giving a total public sector net debt of about 44.4 percent.
There is a lesson here for the government, that is, if it cares to pay attention. Failed banks are enormously expensive. So it would be a good idea to limit the reckless risk taking behaviour with a good stern dose of effective supervision.
The banks need to be reined in, and kept on a tight leash. With house prices slipping and many banks and building societies looking decidedly pasty, it might be a good idea to get ahead of the game push the FSA into doing some work.