Virgin Money snaps up Northern Rock on second attempt at huge discount

I've written about Northern Rock quite a few times since they were brought down by Saint Robert of Peston in 2007 and looking back at what I wrote and what others said is quite interesting.

When Saint Robert of Peston whipped up a frenzy of consumer panic with his misleading reports on Northern Rock's request for an emergency credit line from the Bank of England (misrepresenting it as a loan rather than the offer of a loan if they needed it) he caused a run on the bank which deprived it of its working capital. The inevitable happened of course and the Northern Rock ran out of cash and was nationalised.

Northern Rock has now been sold to Virgin Money at a minimum loss of £400m but possibly as much as £653m on the amount the UK Treasury spent nationalising the bank.  Those of you who have taken an interest in the Northern Rock affair and with good memories for these things might be getting a touch of déja vu at the mention of Virgin Money and Northern Rock in the same sentence because Richard Branson tried to take over Northern Rock before it was nationalised and on much better terms for UK plc than what has just been agreed less than a fortnight after Saint Robert of Peston embarked on his career-making hatchet job on the bank.

The original Virgin Money offer was to buy Northern Rock's entire operation, pay back £11bn of the £25bn Bank of England emergency loan that Northern Rock was forced to take immediately with the balance to be paid within 3 years.  The UK Treasury hadn't spent any money nationalising the bank so the taxpayer's exposure to Northern Rock would have been repaid within 3 years, Northern Rock's operations would have remained intact, Northern Rock's investors would have had a chance of getting a return on some of their investments and the ripples that Northern Rock's collapse and nationalisation sent through the banking sector could have been avoided.  The UK Treasury instead chose to nationalist the bank, costing the taxpayer billions and contributing to the virtual collapse of the UK banking sector.

Whilst I hold Saint Robert of Peston significantly responsible for the collapse of Northern Rock, some of the blame has to fall on the EU because Saint Robert wouldn't have found out about the credit line if it wasn't for the EU Monetary Abuse Directive (MAD) that required the Bank of England to publicise the fact that it had been offered.  The previous governor of the Bank of England, Eddie George, said at the time that if he was still governor when the EU MAD was brought in he would have resigned over it.

Ed the Millibeast has had a pop at George Osbourne about him selling the Northern Rock off at such a loss for no apparent reason but it turns out that he had no choice because the last Chancellor, Alistair McDarling, had to agree to sell off Northern Rock within 3 years to get permission from the EU to nationalise the bank.  And which government department did Ed the Millibeast work in at the time of the Northern Rock nationalisation?  Erm, that would be the Treasury - he was a minister in the Treasury when his boss agreed to the 3 year restriction on the nationalisation!

Richard Branson's purchase of Northern Rock is only for the "good bank" - the "bad bank" was merged with Bradford & Bingley which was also nationalised.  The "bad bank" is still slowly paying back the billions of pounds it owes the taxpayer.  What happened to the Bank of England loan is anyone's guess.  Northern Rock has cost the taxpayer a lot of money - a lot more than necessary so far and the Virgin Money takeover will cost hundreds of millions more.  The mismanagement of the economy and the banking crisis is nothing short of criminal.

The whole Northern Rock saga started with gross incompetence and unnecessary wasting of taxpayers money and it's perhaps a fitting end for the Northern Rock brand that it will finish with a loss-making sale to the bank that tried to buy it before it cost the taxpayer billions of pounds and precipitated the near collapse of the banking sector and at a snip of the price offered in 2007.

Come the revolution there will be a special part of the wall marked out for Saint Robert of Peston, Alistair Darling and all the other criminally incompetent and irresponsible idiots that have cost us so dearly.

Cross-posted from: Wonko's World

British Finance team storms out of EU banking negotiations

Apparently our esteemed finance team had a hissy fit and walked out of the negotiations on financial supervision (by the EU and their new Napoleon) because the French are delighting in emasculating our City.

Funny that these incompetents didn't see this coming, isn't it? What did they expect?

OpenEurope reports:

UK "storms out" out of negotiations over new EU financial regulator;
Sarkozy: For the first time a French Commissioner is in charge of the City of London

EU Finance Ministers will today discuss the formation of a new EU-wide system of financial supervision, including the creation of three new EU authorities with the mandate to overrule national regulators on issues such as shortselling and the recapitalisation of banks. The authorities would also have the power to supervise and intervene in individual firms - moves which the UK is said to resist.

The UK stalled negotiations in October on the three new authorities as Alistair Darling wanted the EU to clarify exactly what powers the new authorities would have if a member state failed to implement decisions taken by the bodies. The UK also wanted all decisions taken by unanimity, Euractiv reports. However, the site reports that EU diplomats believe that Britain is isolated and that the remaining 26 member states will give the new authorities their full support. "Mainly ministers will be asking what kind of majorities will be needed in the new supervisory bodies," one EU diplomat is quoted saying.

Comments made yesterday by Nicolas Sarkozy have added to fears that the proposed architecture, in combination with the appointment of French protectionist Michel Barnier as the next Internal Market Commissioner, will damage the City of London. Sarkozy said yesterday: "Do you know what it means for me to see for the first time in 50 years a French European commissioner in charge of the internal market, including financial services, including the City [of London]? I want the world to see the victory of the European model, which has nothing to do with the excesses of financial capitalism".

Dutch daily NRC reports that "the British are so angry about Sarkozy's triumphalism that they are blocking negotiations on EU banking supervision...The atmosphere has been so poisoned that the British, who think that supervision damages their City, have stormed out of the negotiations, according to an eye witness".

Writing in the Times, Alistair Darling argues, "We must resist measures, however superficially alluring, that could undermine the effective functioning of our cherished single market. National supervisors, such as the FSA, must remain responsible for supervising individual companies. Making companies directly accountable to more than one authority is a recipe for confusion."

In a debate in the House of Commons last night, Shadow Treasury Minister Mark Hoban criticised the Government for not being more active in the formulation and scrutiny of the new proposals. He said: "I'm not optimistic of the Government's chances in insisting on its red lines because I think the Government has repeatedly left debating these matters until too late in the process."

Cross-posted

Darling the hypocrite

In a bizarre piece of grandstanding, Alistair Darling has told the European Empire not to regulate the financial sector in London despite being one of the most vocal proponents of EU regulation of the financial sector.

The European Empire's interference in the financial sector has already been disastrous for our economy.  The collapse of Northern Rock and the subsequent deep recession that we are still experiencing can be traced back to the EU Monetary Abuse Directive (MAD) that forced the Bank of England to publicise the fact that it had offered an emergency credit line to Northern Rock.  This information, which would ordinarily have been kept secret to maintain confidence in the bank, caused mass panic with investors and let to a run on the bank.  Northern Rock collapsed, confidence was lost in the entire banking industry, shares in banks nosedived leaving them short of capital and then the recession ravaged the weakened banks.

The Monetary Abuse Directive is, quite literally, MAD.  The current Governor of the Bank of England's predecessor said at the time that if he was still in the job he would have resigned over the introduction of the Monetary Abused Directive.

This ridiculous hypocritical warning from Darling is prompted by the appointment of the former French Agriculture Minister - the man responsible for blocking any reform of the Common Agricultural Policy (CAP) which accounts for one third of the EU budget and mainly benefits France - as the EU Single Market Commissioner.

Nicolas Sarkozy, the French president, has been gloating about the appointment of Michel Barnier saying it is a sign of "French ideas for regulation that are triumphing in Europe" and that "It's the first time in 50 years that France has had this role. The English are the big losers in this business."

Even more worryingly, Sarkozy also said "Do you know what it means for me to see for the first time in 50 years a French European commissioner in charge of the internal market, including financial services, including the City?  I want the world to see the victory of the European model, which has nothing to do with the excesses of financial capitalism."


The whole purpose of EU regulation of the financial industry, especially under the cosh of the economically illiterate socialist French, is to destroy the UK economy.  Despite the English taxpayer being the second largest contributor to the EU budget after the Netherlands, the jealousy of our European "partners" and in particular the French, at the success of the world-leading English financial sector, means that the City of London is seen as evil and the common belief on the continent is that it must be destroyed.  And, of course, the best way to destroy an economy is through the imposition of socialism as Sarkozy has alluded to above.

No matter what Alistair Darling says, the European Empire will destroy the City by regulation and the imposition of socialist economic policy that is fundamentally incompatible with our economy.  Since the Lisbon Treaty came into force yesterday, the EU government runs our country and has full control over our economy.  Alistair Darling has no more say in how the financial sector is regulated than a parish councillor, which all he is now - a parish councillor in the People's Republic of the European Union..