When the state steps in

Newspaper/publication: The Hindu
Topic: World Economy
Date: 25 Feb 2008
A recent decision of the British government to take over the ailing Northern Rock Bank, has predictably
raised a storm. Until September 2007, when its main sources of funding dried up owing to the turmoil in
the global financial markets, Northern Rock was the country’s largest, high profile mortgage lender,
although in hindsight it seems to have indulged in some reckless lending, very much like the global
banks across the Atlantic. The loss of depositors’ confidence caused a run on the bank, the first for a
British bank since the 19th century. To prevent the run from spreading to other banks, the government
intervened aggressively by pumping in a colossal amount of tax-payers’ ….
URL: http://www.hindu.com/2008/02/25/stories/2008022553701000.htm