Bill suggests that other banks could be nationalised if problems arise
March 17, 2008
The emergency Bill that was recently rushed through parliament in order to allow the nationalisation of the ailing bank Northern Rock is causing concern amongst some industry professionals with many worries that the nature and wording of the Bill means that other banks that experience similar problems to Northern Rock could also end up passing into public ownership, which could result in further negative impact on taxpayer’s money.
Last year Northern Rock became the victim of the first run on a British bank in 150 years. After a series of unsuccessful bids it was decided that the bank would pass into public ownership, at least on a temporary basis. Government officials are insisting that this sort of crisis is not going to occur with other banks, despite the global credit crunch that has caused chaos in the money markets, but to some officials the generalised nature of the Bill means that more financial institutions could end up being nationalised.
One of the comments that was made by the Chancellor of the Exchequer, Alistair Darling, raised some of these concerns, after he stated that the Bill ‘potentially applies to a range of financial institutions’. However, he also added: ‘I want to make clear that the Government has no intention at present to use the Bill to bring any institution into temporary public ownership other than Northern Rock.’
One industry professional stated: ‘They are obviously concerned that there is something else out there - or else they would be doing that in a much more leisurely, properly organised process through Parliament. It is odd that they are rushing through at pace the ability to nationalise other banks which makes you wonder if they are worrying about it.’
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