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moral hazard
Posted at 10:13pm on Feb. 17, 2008 A Virgin Rebuffed; UK to Nationalize Northern Rock Plc.
Liquidity Risk
By blackhedd
According to news reports, the Labour government of Gordon Brown will nationalize Northern Rock Plc, one of Britain's largest retail banks. This is Britain's first bank nationalization in over twenty years, and the largest since the Bank of England was taken over after World War II.
A brief note by the bank to its customers is here.
What got Northern Rock into trouble? They took too much liquidity risk from mortgage-backed securities. Is it a good idea for Britain's government to be taking over a private bank? The answer is not necessarily "No."
Read on...
Posted in Bank of England | Banking crisis | Economy | moral hazard | Northern Rock — Comments (17)/ Email this page » / Read More »
