Government take over of Northern Rock criticised
Criticisms of the Government’s take over of Northern Rock have surfaced as a result of a report issued by the National Audit Office. The Government bailed out the struggling bank in 2007 when it became clear that it was not in the public’s interest for it fail.
However, it has been since become clear that Northern Rock was still providing it’s mortgage customers with a Together product that amounted to 125% of the property value, made up with both a mortgage and a secured loan. The total amount lent to customers with this mortgage type after the take over in 2007 was £800 million.
The Conservative’s Philip Hammond said that “The Government were made aware of the Treasury’s inability to handle this in 2004 but amazingly did nothing to rectify the situation - something which could have saved the taxpayer a lot of hardship”.
Edward Leigh,Chairman of the Public Accounts Committee, said that he was concerned with some of the enquiry’s findings and attacked the Treasury for not doing enough in 2004 despite discovering that it was not suitably equipped to deal with a financial failure such as a run on a bank.
Northern Rock said that it had continued to offer Together mortgages whilst it still looked for a private sector buyer and hoped to sell as a going concern offering mortgage products to customers.
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