Friday, September 14, 2007

David Buik sums the Northern Rock crisis up nicely!

'Northern Rock Dug Its Own Grave'

Northern Rock's financial problems are due to its exposure to sub-prime lending - giving money to people with "pretty doubtful" credit ratings - finance house BGC International's David Buik told Sky. The City expert said the firm had "dug its own grave".

Posted by Webmaster @ 11:17 AM (2171 views)
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5 thoughts on “David Buik sums the Northern Rock crisis up nicely!

  • Hang on a second – the problem here stems from bad credit ratings applied to the CDO packages and general ABS (MBS, CDO, CLO, CBO) mullarkey.

    We have a Credit Rating Agency Oligopoly and this needs to end. There is a great scandal here in the opposite sense to what Mike Milken was villified for.

    The scandal here is to do with busted models being applied to bundles of loans to assess risk. The same applies for so-called creditworthy people. Anyone with a 6x multiple is not creditworthy to AAA+ levels. This all needs to be looked at again. We need a better way to assess risk and one where more than a handful of players are allowed to set risk for everyone.

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  • “giving money to people with “pretty doubtful” credit ratings” … and so inflating house prices. Forget the demand, the supply and the migrants! It is a good thing if NR goes under! They deserve that!
    One thing for sure… Northern, Barclays, Kensington,etc: FORGET CITY BONUSES THIS YEAR!!

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  • The age of the celebrity lifestyle is over.

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  • crash bandicoot says:

    I’m with Ivmreader, it’s the valuing of subprime debt at AAA levels that started this. Do the rating agencies have any interest in selling CDO’s etc. Surely these things should be disclosed or there is a big potential for a conflict of interest.

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