Sinking Like a Rock

This isn’t receiving a whole lot of play in the US media other than the business section of major newspapers from the looks of things, but there’s a bona fide bank run taking place in the UK right now.

Northern Rock Goes Into Freefall

Withdrawals Continue at British Bank

Norther Rock Shares Plunge; Customers Flee

There are many other similar stories out there today. Northern Rock is similar to Countrywide in that it’s primary business is mortgages, but it has a banking arm as well. Like CFC, Northern Rock’s business has been affected by the continuing unwinding of the subprime mortgage contagion, and they whipped up a panic with their banking customers when they were forced to tap an emergency loan from the Bank of England late last week. NR customers weren’t encouraged by their inability to access their accounts online on Friday, either. Never a good thing when you can get at your hard-earned cash…

It doesn’t appear that Northern Rock will implode… it’s more likely that they will be taken over as their share price continues to drop. Still, this is the second major institution after CFC to experience a customer panic/run on their bank, and we’re just getting into the main period for subprime ARM resets, which is expected to peak sometime between this winter and the end of spring 2008. I suspect we’re going to have a bumpy ride getting there, for it seems like one issue pops up right after the last one dies off.

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