Reckless lending has led to Northern Rock losses- Cable
Commenting on the news of Northern Rock losses of half a billion pounds since nationalisation, Liberal Democrat Shadow Chancellor Vince Cable said:”These figures confirm the suspicion, held by many of us, that the Government and the regulators were badly deceived by Northern Rock’s former managers when they agreed to bail it out on the basis that it was a good bank with a good loan portfolio.
“Some of us suspected at the time, and it is now clear, that reckless lending by the managers, in some cases to well in excess of the value of the property, was going to lead to large numbers of borrowers being unable to sustain their mortgage payments in difficult times.
“I am encountering cases of people being repossessed as a result of deeply foolish loans and the bank and the taxpayer who now own Northern Rock are having to absorb the resulting losses. The one redeeming feature of the current situation is that when markets recover, the Government will be able to retrieve some value from the sale of the bank which would not have been the case had they underwritten the losses of a privately run bank, as was their original plan.”
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