Saturday, Nov 22, 2008
Darling Hands tied
FT.com: Northern Rock calls it a day on Granite vehicle
This article seems to contradict a previous proposal by Darling, as you know there is a lot of pressure on Uk banks to lend. Lending cannot be maintained at 2007 levels even for existing borrowers because 50% came from NR. I then expected that Darling would stop the run-down of NR and re-enter the market to supply credit. However, it seems that Granite which supplied NR with funds through securitisation has now gone into run-down and split from NR. So how Darling will be able to force the existing lenders to supply credit seems to me impossible because there is now only 50% of capacity left (which they don't want to lend anyway). NR seems to be gradually distilling itself into a collection of the very worst loans also.
Posted by stillthinking @ 10:55 AM (371 views) Add Comment
3 Comments
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1. paul said...
Good point, stillthinking.
"Master trusts have been used to fuel mortgage lending by a string of UK banks - such as Abbey, HBOS, Barclays and Allliance & Leicester"
Include Bradford & Bingley, and I reckon that's just about everyone significant in the mortgage lending business. If they can't issue fresh loans, the new lending market will effectively dry up completely!
2. planning4acrash said...
If the market dries up completely, there will be no market, and a standoff between banks and citizens. Another squatting movement anybody? Its still legal to homestead abandoned houses and land.
3. mark wadsworth said...
Good find. It appears that The Badger is finding out (at no small cost to the taxpayer) that forcing banks to lend 'at 2007 levels' is a bit more tricky than he first thought ...