RE: [OPE] Northern Rock

From: Paul Cockshott (
Date: Sun Feb 24 2008 - 19:05:43 EST

I was not aware that they had specifically sold on the mortgages as bonds, but they obviously, like any bank had liabilities balancing nearly all their loans.  How much of the existing guarantee provided by the treasury covers the Northern Rock's liabilities to Granite, and how much is in the form of a guarantee to other creditors. As I understand it the guarantee to depositors amounts to around 17M so the 55M guarantee must go well beyond the depositors.

It seems misleading to call bond liabilities their Mortgage Book, since that would normally be counted as the assets of a building society.

-----Original Message-----
From: [] On Behalf Of Philip Dunn
Sent: 24 February 2008 20:54
To: Outline on Political Economy mailing list
Subject: RE: [OPE] Northern Rock

Hi Paul,

I'm not so sure about what you say. The 45 billion is the value of the
mortgages that Northern Rock have conveyed to Granite, not the whole of
NR's mortgage assets. Granite have issued bonds backed by them. These
bonds represent an exposure. Ultimately, NR will have to redeem them.
How much are NR's mortgage assets actually worth?

100 billion seems about right to me.

On Sat, 2008-02-23 at 17:14 +0000, Paul Cockshott wrote:
> Jurrian quotes the Telegraph

> To the 25 billion direct loan to the bank must be added the 30
> billion in guarantees, making the total exposure for the taxpayer 55
> billion. But when the Rock's mortgage book is thrown into the pot, the
> total increase in public sector net debt is 100 billion.

> The paper is confusing things here. The mortgage book consists of
> debts to the Northern Rock not by the Northern Rock, these thus serve
> to offset the existing taxpayer exposure not add to it.
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