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Northern Rock

Northern Rock (or at least part of it) was sold yesterday to Virgin Money.  At the time of its nationalisation, we were told that this could be a "good" investment for the British taxpayer.  It hasn't been, and it never was going to be.  Ed Balls believes that the Tory government got a poor price for it - click here.  The irony, of course, is that Balls was at the heart of the New Labour government which allowed and encouraged  banks to take imprudent risks in the first place.  What a nerve!


The taxpayer loss on the Northern Rock (estimated at circa £400m) is small change compared to the eventual loss to taxpayers associated with the bailouts of RBS and Lloyds-TSB.  In 2009, RBS posted a loss of £24.1 billion (£24,100,000,000) and Lloyd's TSB a loss of £10.8 billion.  The RBS loss in 2009 holds the world record for the single largest corporate loss posted by a failed bank.

Hyun Song Shin at Princeton has an interesting paper on the Northern Rock collapse - click here.

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