Britannia Radio

This is primarily about the confidence trick the government is trying  
to fool us with over Northern Rock.  The headlines wanted were “Rock  
refunds £18bn taxpayer loan” and “massive new mortgage loans from  
Northern Rock”.  But behind those two figures are a ‘massive rise in  
Rock’s losses’ (from £167 m to £1.4 bn) and ‘government gives Rock  
£10bn to increase mortgage lending’ .

Darling is playing silly games and hoping to fool us!

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TELEGRAPH            24.2.08
David Cameron calls for public inquiry into banking collapse
David Cameron, the Conservative leader, has called for a public  
inquiry into how financial regulators failed to spot the collapse of  
banks including Northern Rock and the risky lending practices that  
led to the current credit squeeze.

    By James Kirkup, Political Correspondent

The Tory leader said that the scale of public support for the banking  
system demands some form of investigation into the regulatory regime  
that allowed the current crisis.

"I think that it is unthinkable that we could spend all this public  
money, that we do all these things and at no stage there is an  
inquiry where we get to the bottom of who established the regulatory  
system why didn't it work," Mr Cameron told Channel Four News. "Of  
course there will have to be an inquiry."

Mr Cameron's comments come as Northern Rock said it would not try to  
help first-time buyers as part of a £14 billion package of new  
mortgage lending.

Ministers announced that the privatised lender will change its  
strategy to resume new mortgage lending.

Previously, the Rock had been cutting its mortgage lending and  
focusing all its efforts on repaying billions of pounds of loans from  
the Treasury.

Now, the bank will keep around £9 billion of public money and get  
another £3 billion in new loans.

The Rock will now aim to make £5 billion of new mortgage loans this  
year, and £9 billion next year.

Alistair Darling, the Chancellor, said he had ordered to the Rock to  
change its business strategy because foreign banks have withdrawn  
from the UK, reducing the total volume of credit available.   "What I  
want to do is use Northern Rock to help fill the gap," he said.

Gordon Brown has said that he wants to ban mortgages for 100 per cent  
of a property's value. Before its collapse, Northern Rock had offered  
125 per cent mortgages.

Now, the bank will lend no more than 90 per cent of value, and in  
most cases much less than that, according to Gary Hoffman, the Rock's  
chief executive.

Mr Hoffman ruled out any attempt to give particular help to people  
trying to buy their first home.
"We are not focusing on first-time buyers," he said. "It would be  
great news to help first-time buyers and it would be great news to  
help those who have been excluded from the mortgage market but we are  
not saying we will be lending a lot of 90 per cent loans to first- 
time buyers."

Instead, he said the bank would be making "relatively small loans to  
unlock chains" where several property sales are frozen because one  
buyer cannot get access to finance.  [Most chains get locked up  
because there is no buyer for the lowest priced property - the first- 
time buyer is missing.  Don’t they know that ? -cs]

Mr Hoffman - who along with other Rock directors will receive no  
bonus for last year - also revealed that the Bank made a would make a  
full-year loss of £1.4 billion before tax in 2008 after paying back  
£18 billion to the Government loan.

The proportion of Rock mortgage holders who are more than three  
months in arrears is now 2.92 per cent, up from 1.87 per cent in  
September.

George Osborne, the Conservative Shadow Chancellor, said that  
Northern Rock new mortgages would not be enough to change the  
fundamentals of the housing market.
"This is a huge U-turn for the Government but it's not going to make  
a massive difference," Mr Osborne said. "It's not going to be the  
silver bullet."

Michael Coogan, head of the Council of Mortgage Lenders said:  
"Anything that improves the supply of lending is a positive."

Mr Osborne also suggested that a Tory government could create new  
legal curbs to separate investment banks and retail banks. Such rules  
existed in the US until the 1990s and their abolition has been blamed  
by some for the recent financial crisis.

Gordon Brown has ruled out any new laws, but Mr Osborne said the move  
was "worth considering."

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DAILY MAIL   24.2.09
Northern Rock to reward 500 executives with bonuses despite  
announcing £1.4bn loss
    By SAM FLEMING


The payout plan clashes with Brown's insistence that no banker  
associated with a loss will receive a bonus

Northern Rock will hand big bonuses to 500 executives despite  
condemning taxpayers to losses of £3.8million a day.

Bradford & Bingley, another state-owned bank, also wants to spend  
millions of pounds on immediate and deferred payouts.

Northern Rock revealed yesterday that it lost £1.4billion in 2008,  
compared with a shortfall of £167.6million the previous year.

Around 17,400 Northern Rock customers are now at least three months  
behind on their mortgage payments.

In a major U-turn, the bank is also returning to large-scale mortgage  
lending, after spending the past year turning customers away.

It will receive £10billion in taxpayers' cash to help it pump  
£14billion into the crippled mortgage market over two years.

That is a major reversal after Northern Rock successfully lowered its  
existing state loan by £18billion to £8.9billion.

It could now take until the middle of the next decade or beyond  
before the firm pays off its debt to the state. The Prime Minister  
had planned for the loan to be cleared by next year.
Gary Hoffman, Northern Rock's chief executive, yesterday laid out  
plans for the staff incentive scheme along with a timetable to return  
to active lending.
'Pay for performance is not a bad thing,' he insisted. 'Someone who  
goes the extra mile is likely to deserve more.'

In order to keep its staff keen, Northern Rock is drawing up a new  
bonus scheme with fresh targets.

Instead of rewarding workers for quickly paying off taxpayer debts,  
Northern Rock will reward them on areas such as financial performance  
and customer satisfaction.

Top executives will forego cash bonuses for 2008 and 2009 and have  
their pay frozen. They are promised deferred payments instead.

Some 4,400 employees shared payouts worth 10 per cent of  their  
salaries for 2008. Their basic pay averaged £21,000, leading to a  
total of around £9.2million in bonus payments.

Another 400 junior managers are in line for deferred bonuses in the  
form of an IOU from the company, rather than cash, the firm said.

A spokesman said it is was impossible to say how large those payments  
for 2009 will be because 'the business plan is still under review'.

But if the Rock matches last year's pace, tens of millions of pounds  
worth of payments could be made  -  deferred until 2010  -  despite  
the firm remaining in state control and suffering further losses.

The revelation sparked fury yesterday. Labour MP George Mudie, a  
member of the Treasury Select Committee, said: 'It's appalling and  
yet another indication of how genuinely out of touch senior banking  
executives are with public opinion.'

Mark Wallace of the TaxPayers Alliance said: 'The Government needs to  
get its priorities straight about what it wants Northern Rock to do.
'That priority should be to get the taxpayers' money back.'

Northern Rock fell into public ownership last year after becoming the  
first lender to suffer a run on its deposits for more than a century.

Some 2.9 per cent of its 600,000 residential customers were in  
arrears at the end of the year, up from 1.87 per cent previously.

But its finances were bolstered by  £19.6billion of retail deposits,  
as savers fled privately-owned firms for the perceived safety of a  
state-owned bank.
David Cameron last night demanded a public inquiry into regulatory  
failings over banks.

The Tory leader told Channel 4 News: 'It is unthinkable that we could  
spend all this public money, that we do all these things and at no  
stage there is an inquiry where we get to the bottom of who  
established the regulatory system, why didn't it work. Of course  
there will have to be an inquiry.'