Brits Hatch Secret Plan to Bail Out Northern Rock

No good options for struggling bank
By Kevin Spak,  Newser Staff
Posted Dec 18, 2007 2:05 PM CST
Brits Hatch Secret Plan to Bail Out Northern Rock
British Prime Minister Gordon Brown appears before the House of Commons liaison committee in London Thursday Dec. 13, 2007. Lawmakers are likely to use the opportunity to press Brown over troubles at Northern Rock, the ailing mortgage lender whose woes resulted in the first run on a British bank in...   (Associated Press)

Worried that the state might be stuck nationalizing Northern Rock, Britain has worked up a contingency plan behind closed doors to divide the troubled bank among the country’s commercial banks. A private buyout is still preferable, the Guardian reports, but some now fear the main bidders will back out, leaving the government holding the bag.

If the government can’t unload Northern Rock, it will push public debt over 40%, breaking one of Gordon Brown’s fiscal rules. But the big banks' help isn't free—the institutions will probably want guarantees that they won’t lose money on the deal, and preferential treatment in an industry that’s lately been much investigated. (More Gordon Brown stories.)

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