Customers waiting in line to get their money - they did, British taxpayers won't

Is there no end to government corruption?

In 2008, the government nationalized the bankrupt bank Northern Rock and injected $1.4 Billion of taxpayer’s money to save it.  This was in addition to the £25 Billion that Northern Rock owed the Bank of England.  The bank had got over-extended by lending  too generously, way beyond its deposits, and relying on inter-bank lending, which then dried up when the American banks got caught out by their bad loans to unreliable borrowers.

At the time of the bailout, we were told by the last government that in due course the taxpayers would get their money back.  At no stage did Gordon Browns and Alistair Darling – or their cheerleader like Lord Skidelsky – qualify that pledge with the word “some.”  They said we would get our money back.  Yes it would take time, but in the end we get our money back.

They even said that we would probably make a profit!

But what have they done now?  They have sold Northern Rock to Richard Branson’s “Virgin Money” for £747 million, plus a  further £50 million within six months. According to press reports “an additional £150 million will be realised in the form of a financial instrument.”  Finally the deal promises “up to” an additional £80 million if Northern Rock is sold or publicly floated within  five years of the deal. In other words it is being sold for £947 million, with the possibility of a further £80 million.

In other words, we taxpayer’s poured in £1.4 Billion, we assumed the full risk when the bank was going through that critical period and now that the risk is over, Richard Branson is going to get his greasy paws on our property for less than three quarters of the price that we taxpayers paid for it!

What is interesting, is that so far the politicians of the last government haven’t contradicted the claims of the Chancellor of the exchequer, George Osborne, that this is good deal for the taxpayer.  In other words, they do not dispute that Northern Rock is worth less than we taxpayers were forced to pay.  By the same token, George Osborne and David Cameron didn’t criticize the bailout at the time on the grounds that we were paying too much for what the asset was actually worth.  Although they criticized the incompetence that led to the collapse, they supported the bailout -presumably because they wanted to stay on the right side of their cronies in the banking sector for that rainy day in the future.

This is not the first time Branson tried to buy Northern Rock.  he tried when it first got into trouble, but on terms that would give him the profit while the risk would still be with the taxpayer.  But now he has got his way.  And of course the bank is still some £8.9 BILLION in debt to the Bank of England.  They have been repaying this faster than expected – which no doubt explains why Branson is so anxious to get his paws on the bank.  It will be a cash cow for him and the British taxpayer will carry the burden.

But that’s no skin off Branson’s nose – most of his companies are registered abroad… IN TAX HAVENS!!!!!!


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