Lib Dems still trying to damage Northern Rock

Mr Cable cannot go on the media without saying something nasty about Northern Rock. Today he was accusing a leading shareholder of “blackmail”, when all the shareholder was doing was poiting out that this is a regulated solvent company according to the FSA and the Bank of England, still trading and with a valuable mortgage portfolio. Mr Cable should stop attacking it, and understand that there are ways to protect the mortgages, the deposits and the taxpayer loans without nationalisation. Any sensible person who cares about the living standards of people in the UK should want a successful outcome to the rescue, and would understand that attacking the current shareholders who still decide the future of this bank is counterproductive.

I am glad there are bids on the table that may offer a way forward. There is also the option of running the bank to ensure the taxpayer is repaid, following agreement on the timing of repayments, without a takeover. I still think the government should set out in public how much money it will advance for how long, so every bidder bids on the same basis, and so the taxpayer can see how his or her interest is going to be protected. The taxpayer also needs reassurance that the government/Bank have taken sufficient security over Northern Rock’s assets to protect the position. If they haven’t so far, they should do so now and publish how much collateral they have for the loans.

The absence of public information over how much the taxpayer has committed. Parliament should be told about this large sum. Those assessing the bids should also want to know that all bidders had bid on the same basis concerning the available public support, and should want confirmation that there are no misunderstandinbgs about how much money is on offer for how long. You cannot value Northern Rock shares today, as Mr Richards the shareholder said on the radio, unless you know how much public money is on offer on what terms.

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  • About John Redwood

    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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