I'm absolutely bloody furious that a) this sub-prime debt was bought by UK banks in the first place, wasn't it given a high credit rating as well? and b) the banks have invented systems so complicated that they don't know exactly how much debt they own and to who. How did the auditors sign that off?
Northern Rock gets bank bail out
- Thread starter cheets64
- Start date
I'm absolutely bloody furious that a) this sub-prime debt was bought by UK banks in the first place, wasn't it given a high credit rating as well? and b) the banks have invented systems so complicated that they don't know exactly how much debt they own and to who. How did the auditors sign that off?
Sorry, but that's a load of crap.
If the banks can't get access to cheap money (as is the case at the minute with the LIBOR rate way above the BoE base rate) they will raise the interest rates on their loans.
Some banks have already done this http://news.bbc.co.uk/1/hi/business/6990991.stm
Thats probably why you can't get a car loan. You won't make them much money.
I'm in the same boat, always paid off any debts/bills/credit cards/etc, can't get a loan or anything resembling a decent mortgage for toffee.
I was looking at this from their 2006 accounts:
Registered Number: 03273685 Sales: -
Date Incorporated: 30 October 1996 Pre-Tax Profit/Loss: £626,700,000
Date Latest Accounts: 31 December 2006 Working Capital: £ (96,922,800,000)
Employees: 5936 Net Assets: £3,210,600,000
Net assets of £3bn.
my point being, banks difficulties dont set base rates. the BoE does. there are still good deals to be had out there from banks with regard to mortgages.
the problem with the sub prime stuff is its generally off the books, so one knows how exposed banks are.
I don't think that savings people have deposited with the bank count as assets for the bank. It would actually be debt that the bank owes I think.
Man of Honour
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This is how all banks work though. It's amazing how fluid debt is to banks, and providing the risk is estimated properly all is fine.
Burnsy
The problem is that the loans were packaged as bonds and given a AAA rating when they were sold to the banks.
The reason this happened is that in a lot of instances, the groups authorised to grade the bonds are very much in bed with the institutions offering them. It wasn't done so much on the belief that these consumer debts would easily be paid off (as any idiot could see they were going to struggle at some point) , more because the two firms have very close ties.
Interesting articles about in this week's Economist & Investor's Chronicle for anyone who wants to know more.
This is what I fail to understand, as you say a loan is an IOU so it is effectively treated as a bond.
Pretty much the only bonds which are AAA rated are first world government bonds, so how the hell they gave CDOs similar ratings is beyond me.
Seems mind-boggling that sub-prime lending was given AAA ratings, is that true?
My wife is a credit officer for a large european bank (itself one of the top 10 AAA rated institutions) and is having a 'mare at work at the moment. The lack of liquidity in the market means that it's impossible to find funds for even the most rock solid deals.
My wife is a credit officer for a large european bank (itself one of the top 10 AAA rated institutions) and is having a 'mare at work at the moment. The lack of liquidity in the market means that it's impossible to find funds for even the most rock solid deals.
Haircut... see the post below the one you quoted m8 
Grab the two magazines I mentioned- both contain some interesting articles & explanation on the situation
The whole thing is now being investigated in the US and I think will one day go down as a marked 'scandal' or 'fiasco', as you are right- bonds with AAA ratings should only be issued when the debtor is the least likely group to go bust- i.e. US/EU nations.
Grab the two magazines I mentioned- both contain some interesting articles & explanation on the situation
The whole thing is now being investigated in the US and I think will one day go down as a marked 'scandal' or 'fiasco', as you are right- bonds with AAA ratings should only be issued when the debtor is the least likely group to go bust- i.e. US/EU nations.
im just after a 5 grand bank loan of some sort, i dont mind if the interest isnt the best. ill be happy with it.
i think its cus im self employed and they dont want to know.
this from sky -
Bank's Customers Told To Stay Calm
Updated: 11:01, Friday September 14, 2007
Northern Rock customers appear to be ignoring the bank's call to stay calm over fears of its financial future.
Customers have been seen queuing at a number of branches to withdraw their money.
One branch in Newcastle had customers outside in the street as they waited to withdraw their money.
Savers say they are concerned for their investments following the news that the Bank has called on emergency funding from the Bank of England to help it through the credit market crisis.
"I'm not sure about this, even though they say it is going to be all right. If they are short of funds, what happens to our funds?" said one customer.
Another customer, a pensioner said she was withdrawing all her savings.
Another woman, who was with her husband, said she was worried and added: "I want to spend my money before someone else does."
People in the queue burst out laughing when one staff member asked them: "Does anyone want to pay money in?"
Bank's Customers Told To Stay Calm
Updated: 11:01, Friday September 14, 2007
Northern Rock customers appear to be ignoring the bank's call to stay calm over fears of its financial future.
Customers have been seen queuing at a number of branches to withdraw their money.
One branch in Newcastle had customers outside in the street as they waited to withdraw their money.
Savers say they are concerned for their investments following the news that the Bank has called on emergency funding from the Bank of England to help it through the credit market crisis.
"I'm not sure about this, even though they say it is going to be all right. If they are short of funds, what happens to our funds?" said one customer.
Another customer, a pensioner said she was withdrawing all her savings.
Another woman, who was with her husband, said she was worried and added: "I want to spend my money before someone else does."
People in the queue burst out laughing when one staff member asked them: "Does anyone want to pay money in?"
Soldato
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Lots of people qued up outside the one in brighton. What does this mean to them?
Hope they're getting cheques written, would be an easy target for thieves - lots of old people with their savings
Hope they're getting cheques written, would be an easy target for thieves - lots of old people with their savings
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What about loans and mortgages?