Northern Rock just a stone's throw away from oblivion
They must be going crazy there.
Yesterday, in a bit of a panic scare, their customers withdrew about one billion pounds, today looks like it was about the same madness. People are lined up around the blocks with Police having to do crowd control, because the people donâ€™t trust the bank, or those communicating on itâ€™s behalf.
Northern Rock has about 24 billion of peopleâ€™s pounds they look after, and much of that is tied up in mortgages loaned out to itâ€™s other customers. Thatâ€™s how banks do business. But because of recent strains on the world market, money markets Have stopped lending money to Northern Rock, again due to the crisis in the US sub-prime mortgage market.
The Bank of England has made available cash for Northern to borrow if it needs it, so there is money there. The Chancellor, the British Bankers' Association and on down the line are saying it will be alright, just give it time. However people are not convinced it seems.
As itâ€™s shares continue to drop, Northern Rock will probably be taken over by a bigger financial institution. In this ongoing story, people who have money in savings at Northern should be alright.
But here is a glimpse at how things can go so badly, so quickly.