Northern Rock - it is the scandal that keeps on giving. Just when you think it can't get any worse, the bank produces more embarrassment and distress for the jokers that run the FSA, the Treasury and the Bank of England.
According to the Telegraph, NRK will report first half losses of £500 million. Furthermore, these losses will put that bank in breech of minimum capital requirements. If that wasn't bad enough, that capital requirement is based on special waiver from the FSA, which relaxed the ratios that NRK must meet. Nevertheless, the bank managed to breech that minimal standard. In other words, after 18 months of state ownership, NRK is now more insolvent than ever.
However, the cherry on the cake has to be the fact that this wreck of a bank is still writing mortgages. It seems that the government wants NRK to lead the charge. Where another banks fear to tread, Northern Rock will go. Despite its horrific financial condition, it will just keep on lending.
The government has yet another plan to resolve this infected, puss-ridden institution. It is going to restructure the bank, transforming £3 billion of taxpayer's money into worthless equity, take out the bad loans, and then flog the "good bank" to Tescos. In order words, the taxpayer is going get caned, and Tescos will do very nicely, thank you very much.
Is there a lesson from this sorry story? If there is, it doesn't look like anyone down in central London bothered to study it.