Friday, Jan 18, 2008
Moody's to cut ratings of UK BTL lenders
Reuters: Moody's puts Derbyshire Building Society on review
AL, BB and Derbyshire under review
Posted by confused76 @ 03:05 PM (819 views) Add Comment
6 Comments
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1. drewster said...
Here's the strange thing: if all of us amateurs can see these problems arising several months in advance, why has it taken so long for the professionals at Moody's to notice it too? If everyone would just speed things up a bit, we can get this crash out of the way as quickly as possible and I can buy a house!
2. Cartimandua51 said...
It's very much in the recesses of my memory, but didn't the Derbyshire have Northern Rock scenes of panicking buyers queueing outside, about 30 years ago? Except that the other building societies pulled the stops out and vanned up shedloads of cash?
3. jack c said...
drewster - in answer to your question "if all of us amateurs can see these problems arising several months in advance, why has it taken so long for the professionals at Moody's to notice it too?" - There have always been potential conflicts of interests for the rating agencies that strike at the heart of how they do business. The most obvious one is that Bond issuers pay the agencies for a rating, which is bound to call into question the agencies' independence.
Good luck with the house hunting - you just need to be patient
4. techieman said...
This is what i posted earlier re a blog about the failure of banks in the nineteenth century: "The most interesting thing was that a bank failed [as the BoE didnt intervene] and there was a run on all of 'em. I've only read it breifly but it seems to me that if NR was allowed to fail then that may have been the catalyst for a string of failures. My point has been that the first bank to have a run is not neccesarily the last. If / when the next one goes that will be the real test."
5. quiet guy said...
@techieman
""The most interesting thing was that a bank failed [as the BoE didnt intervene] and there was a run on all of 'em."
Interesting. You seem to be implying that allowing NR to fail might have caused an even worse UK banking crisis than the current one. If so, then we have to (grudgingly) give the government some credit for choosing the lesser of two evils.
Don't misunderstand me. I am not at all keen on our control freak spend and tax incumbents but I do believe in giving credit when it's due.
6. techieman said...
@qg - yes. I understand that this is abhorrent to most people and fully understand why, but i think we might see the alternative soon (the govn wont bail out every lender that goes to the wall although i dont really know enough about the 2nd line banking crises and the lifeboat scheme in the past to comment fully - I'm not THAT old). I also think that whopever was in power would have done the same. I wouldnt give the govn (whichever persuasion it was) any credit though. The bubblemania would have been allowed by both so the cause of this is the issue. What they governments should have done imo was to limit LTV on the way up. That way there would be less credit and less liklihood of whats now happening. I think they had no real option than to do what they did, but now they are hopeing that thats the first and last one.
"The British banking crisis was just one such spectacular instance of when these most august of financial institutions went blissfully bust in the aftermath of a typical herd movement which had always served everyone's best interests so bad ly. High property values, over-extended banks (especially the so-called second-tier) and a booming stock market proved to be a dangerous combination. A number of secondary banking institutions collapsed during the autumn of 1973 and there was a savage bear equity market during 1973-74. Only intervention by the Bank of England's so-called `lifeboat' operation kept things even vaguely afloat. "