"At 31 December 2008, Northern Rock’s high loan-to-value Together mortgages, represented around 30 per cent of the mortgage book, about 50 per cent of overall arrears and 75 per cent of repossessions. Northern Rock continued to write these high risk products during the period it was receiving emergency support from the taxpayer, albeit at a reduced volume compared to the period prior to September 2007."
National Audit Report on the Nationalization of Northern Rock
I can't go on. I can't read any more of the NAO report on Northern Rock. I got as far as page 33 and I then read the above paragraph. I had to stop; the incompetence: the stupidity; the criminal waste of taxpayers money; it is just too much to bear.
The "Together mortgage" put borrowers into a 25 percent negative equity position from the moment they signed the loan documents. Moreover, 30 percent of the loan was unsecured. As the NAO report confirms, this mortgage generated huge arrears and massive losses.
By the time the bank collapsed, everyone understood the suicidal stupidity of "Together mortgages". Everyone, except the Treasury, the Bank of England and the FSA. Between September 2007, when the bank started to receive taxpayer's money, and February 2008, when the bank was finally nationalized, Northern Rock originated almost ₤2 billion of new Together loans.
Why didn't somebody stop them? Didn't anyone bother to consider the madness of handing out public money to this bank, who then used that financing to originate further billions of the most outrageous mortgage product on the planet? What are these people taking? Do they not think?
Over the last two years, this country has built up an horrific record of catastrophic financial mistakes - RBS, NRK, the Lloyds-HBOS merger, the Bradford and Bingley, Goodwin's pension - just to mention a few. The taxpayer has committed over a trillion pounds to supporting the UK banking sector. It has got to stop. We are being improvished by stupidity.