Northern Rock Customers Crowd Branches, Withdraw Cash (London, England)

[Zenlitened]

Source: Bloomberg News

By Sabine Pirone and Shelley Smith

Sept. 14 (Bloomberg) -- Hundreds of Northern Rock Plc customers crowded into branches in London today to pull out their savings after the mortgage-loan provider sought emergency funding from the Bank of England.

``It's scary,'' said Peter Pye, 60, a retired university lecturer standing in a line of about 30 people outside the Moorgate branch in the financial district. ``I have my life's savings in Northern Rock.'' He said he would withdraw a ``six- figure'' sum and leave 5,000 pounds in the account.

The Bank of England said it will provide emergency cash to Northern Rock, Britain's third-largest mortgage provider, in the nation's biggest bailout of a financial institution in 30 years. The rising cost of credit left the lender unable to make new loans and stoked concern among customers about their money.

Northern Rock, which has 1.4 million retail depositors and 800,000 mortgage customers, hasn't imposed any special limits on withdrawals, spokesman Don Hunter said. The Newcastle, England-based company, which traces its roots back to 1850, had to restart its Internet banking site ``over a period of time'' today after unusually high usage froze the service, he said.

Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=aZqoCZV5vC70&refer=home

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This seem relatively small-scale, and I don't think I'd call it a "panic" at this point. But still kind of eerie nonetheless. :(

Some photos from the Bloomberg website (www.bloomberg.com):

http://www.bloomberg.com/apps/data?pid=avimage&iid=i0vJ_z0yNS8Q

http://www.bloomberg.com/apps/data?pid=avimage&iid=icJNmp0_CsXM

http://www.bloomberg.com/apps/data?pid=avimage&iid=itx9ofEdH6jQ

[truthisfreedom]

1. Once this news gets around, a lot more people will be "crowding" into the lobbies

of that bank's branches. Panic is a frightening thing.

[Pirate Smile]

2. Oh great, bank runs.

[superconnected]

3. I wonder if it's owned by a conglomerate. I suspect it will happen here

if they have even a sister company.

[Baby Snooks]

4. Certainly has caused a run on Wall Street...

It hasn't made a dent on Wall Street. The rich get richer as the Fed and the other central banks including the Bank of England bail them out so they can cover their losses on loans that shouldn't have been made in the first place. Sure, they're borrowing the money. But the interest they're paying will be paid by the bank customers, not by the bank, through higher fees and interest rates. Which will include a little extra profit for the banks.

Corporate welfare has become the new welfare. Let the rest eat cake as Marie Antoinette once said. Shortly before they hauled her off to the guillotine. There will be no guillotine now. Only economic collapse. And the rich will emerge even richer.

[Mark Baker]

6. Northern Rock aren't a subprime lender

There's no reason to believe that they shouldn't have made the loans they did (although all banks are offering higher salary multiples than they used to, a response to - and partial cause of - high house prices).

However, like the subprime lenders they finance their mortgage lending by reselling the debt to other banks. Because of the problems of subprime lenders, no-one wants to buy credit derivatives any more, even ones issued by more responsible banks like Northern Rock.

[roamer65]

5. Now they have secured the Bank of England funds...

it is stupid for these people to line up like this. Go figure. Northern Rock now has a limitless supply of cash through the BoE. The BoE will print currency if necessary. In the age of fiat currencies, major banks won't be allowed to fail...only the currencies themselves can fail. We printed our way out of the S&L debacle, for example.

[girl gone mad]

9. BoE granted Northern Rock an emergency loan..

and it was almost certainly against collateral. In no way were they handed a limitless supply of cash. Customers are only protected for the amounts I mentioned in a post below, much less than what our FDIC covers.

[Henny Penny]

17. You are asking people to bet their pensions and life

savings on the the statements of the bank and politicians being true.

If it was me I'm afraid I'd take my money out, in fact I would have done so several weeks ago when the rumours about Northern Rock started.

If someone is going to get my money they're going to need my trust. once that goes its over.

[TheWatcher]

23. Heresy.

Don't you know the Fractional Reserve Banking System and Fiat money is GOD?

I want you to write "The FED is my savior, and I will have no other Gods before them" on the Black Board 100 times until you feel better. :)

[TheWatcher]

22. Printing your way out of a Crisis solves nothing.

In fact, it only leads to bigger ones down the road.

But wait, I forgot, everything is great.

Sorry, my bad.

[girl gone mad]

7. Northern Rock customers queue for cash as crisis hits high street (run on UK bank)

Source: Telegraph

Northern Rock customers queue for cash as crisis hits high street

By Emma Thelwell
Last Updated: 7:26pm BST 14/09/2007

The credit crisis spilled onto Britain's high streets today as worried Northern Rock customers queued up to withdraw their savings.\

Their fears were prompted by the revelation this morning that Britain's fifth-biggest mortgage lender had to ask the Bank of England for emergency financial assistance.

Despite Northern Rock's assurances that there was no need for customers to panic, queues continued to build steadily at the London branches visited by the Daily Telegraph today.

For 65-year old Tony Looch, with savings of £135,000, the lender's calming words were not enough.

"I'm prepared to wait as long as it takes. I'm taking the lot out, if they'll let me have it," said Mr Looch, who was queuing outside the bank's Moorgate branch, in the heart of the Square Mile.



Read more: http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/09/14/bcnnorth414.xml

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British citizens do not get the same level of protection that we do. Savings accounts are only covered for 100% of the first £2000 and 90% of the next £33000.

[intaglio]

8. Privatisation Stinks

Until 1996/7 Northern Rock was a Building Society (think Savings and Loan but with a deal more security) they were owned by their lenders and investors then ...

The rot started under Margaret Thatcher (spit) when she softened the rules on these organisations becoming publicly quoted on the stock exchange becoming banks not cooperatives. Management would bribe shareholders with incentives to privatise and sell their shares so everyone could make more money, though the real profiteers were those same management teams. Since then there have been continual threats of failure and mismanagement amongst those firms which did privatise

GRRRRRRR

[T_i_B]

12. Not so much"privatization"

As it went from being one form of private enterprise to another.

All the same, there is always the debate about whether or not it's better for these organizations to be proper building societies or public limited companies. In this case you have to ask the questions about who is liable for the debt.

Either way it's not good at all.

[earth mom]

10. A run on the bank...yet we hear nothing about it on the evening news.

:wtf:

The corporate media bastards can't let the "consumers" of this country know the truth now can they?

:puke:

[SirBlackAdder]

11. Uhhh, ohhhhhh

Uh, oh, can anyone say 1929? I cant believe the housing marked balloon loans will cause this. They are only 5% of the loans out there. But yea, just like the 'war', the top end gets richer, this is really sick. And of course, now we have no constitution left, so if you complain, to the 'camp' for you. I honestly think it could happen now. It looks like they want to replace expensive Americans with a cheaper labor force, and run America like the movie Metropolis.

I could be wrong...I hope Im wrong...its all so wrong.

[T_i_B]

13. As it's a UK business...

...it's a big story in the UK media, although annoyingly the British tabloids are still obsessed with the Madeline McCann case above all else.

[muriel_volestrangler]

14. This was triggered by Northern Rock saying it had arranged the ability to borrow

from the Bank of England, but it hasn't yet done so - but that was enough to get the depositors to withdraw money. Meanwhile, in the US, some banks have borrowed from the central bank, for the same reason - but, because they haven't been named, there's been no panic:

Banks borrow $7.2 billion from Fed
Banks in New York, Cleveland, Richmond tap discount window


WASHINGTON (MarketWatch) -- In the first significant borrowing from the Fed since it lowered the discount rate last month, U.S. banks borrowed $7.2 billion from the Federal Reserve as of Wednesday, the most since just after the attacks of Sept. 11, 2001, the Fed said Thursday.
The average borrowing for the week was $2.7 billion per day.
The Fed data don't detail the names of the borrowers. The data indicate that $4.9 billion in loans were owed to the Federal Reserve Bank of New York, $1.6 billion to the Cleveland Fed, and $550 million to the Richmond Fed.
Last month, five big banks had borrowed from the discount window in a symbolic show of support for the Fed. The borrowing from the Richmond Fed appears to be a holdover from the symbolic borrowing earlier.

http://www.marketwatch.com/news/story/banks-borrow-72-billion-fed/story.aspx?guid=E692D620-B805-45C0-8A07-8D5D32F545AB&dist=SecMostRead

[modrepub]

15. Jumpy customers besiege crisis-hit British bank

Source: Reuters

LONDON (Reuters) - Thousands of nervous customers queued for hours outside branches of British bank Northern Rock on Saturday desperate to withdraw savings after it was forced to seek emergency funds to weather the global credit crunch.



Read more: http://news.yahoo.com/s/nm/20070915/bs_nm/northernrock_customers_dc;_ylt=AoeP2p_i2biN4a9qnkUd1Gis0NUE

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A bank run?! WTF!

[Kagemusha]

16. Well the web site crashed bad so they had to go in person.

The thing to keep in mind is that the bailout is to make sure that the institution DOES NOT go under. Its business model is risky these days, yes, but the real problem was that banks aren't lending to other banks except at crazy interest rates because of fear, so the bank here couldn't do its usual sub-prime mortgage business anymore without this kind of aid.

It's not going insolvent unless they allow it to. Nothing I've heard suggests that even with more defaults, that they weren't making money; it's just that without more credit with which to fuel the process, they can't do more business at any price. But word of the taking out of the bailout indeed triggered a real bank run, the old fashioned kind.

These aren't small banks that a government's going to just let go under without a fight, though. And certainly not to allow a bank run to bury a bank that, sans bank run, would have survived.

[muriel_volestrangler]

18. It's actually not involved itself in sub-prime lending

it just expanded very fast over the fast few years, by borrowing from institutions rather than small depositors. This means it's hit far worse than others by the general reluctance of all the banks to lend more money.

[Kagemusha]

19. Hmm, apologies, I got a different impression from some British sources.

Either way it is the credit crunch that's done the real damage.

[Neshanic]

20. B of E We are not going to help, no sir....uh forget that, we changed our minds.

Under the terms of the bail-out, the Bank of England will provide an open-ended facility to Northern Rock allowing it to access liquidity by posting mortgages or mortgage-backed securities as collateral. The rescue – finalised in the early hours of Friday morning after days of intense negotiations involving the Bank, the Financial Services Authority, and the UK Treasury – came just two days after Mervyn King, governor of the Bank of England, insisted it would not intervene to bail out the markets.

If the B of E was not going to help at first, I would hardly call these people stupid to stand in line...this for the poster calling standing in line "stupid".

[muriel_volestrangler]

21. But no-one was standing in line before the BofE made its announcement

they were triggered purely by the announcement that Northern Rock would be loaned the money if it asked for it.