Of course that's because it was in the UK. And banks were open on Saturday. BBC showed folks lined up outside the Northern Rock mortgage bank waiting to remove their deposits something not seen in any other market correction, err crash, since 1929. "Remember, 1928 was a credit bubble that popped in '29"
It might have caused problems in the 1930s, but modern banking controls and accounting had consigned bank runs to economic history's dustbin.
WILL HUTTON, THE WORK FOUNDATION
We are in the middle of a bank run.
We've never seen it on this scale in Britain - of a major bank - since the 19th century.
This is a sure indicator of a recession.
The firm has been withering under the harsh spotlight of media glare on the mortgage-lending mess, ever since it came to light Friday that Northern Rock needed a British central-bank bailout. Unfortunately, the bank built its lending business on taking in loads of short-term borrowings, followed by loan securitization and sales. Over the past few months, as credit markets have finally decided to reevaluate risk, both ends of that pipeline have gotten seriously clogged.
This wouldn't happen in Canada, though the picture below is from the 1832 bank run in Montreal, because Purdy Crawford has ridden to the rescue.
THE BANK OF ENGLAND HAD NO choice but to agree to provide emergency liquidity last week to ailing U.K. mortgage lender Northern Rock, even at the risk of being seen as supporting a bank with a flawed business model.
Clearly, Northern Rock's customers and the impact that the lender's collapse would have on the rest of the U.K. banking sector, the housing market and the broader economy have been uppermost in the BoE's mind.
The queues of customers outside Northern Rock's branches Friday, seeking to withdraw their savings despite assurances from the central bank and the government that Northern Rock (ticker: NRK.U.K.) is fundamentally sound, proves the point.
But investors aren't buying the idea that Northern Rock will weather the liquidity crunch. The stock was down 25%, to 483 pence (about $9.85), in late Friday trading in London, even though the bank is in no immediate danger of going under.
Northern Rock isn't guilty of reckless lending. The problem is that the bank, the U.K.'s fifth-largest mortgage lender, sources a large proportion of its funding from the wholesale market through covered bonds and the securitization of mortgages. Only 25% of its funding comes from customers' deposits, versus 65% for a typical U.K. bank.
asset-backed commercial paper ,, UK
homes, mortgages, housing, bubble, US, economy, Northern Rock , sub-prime mortgage, Wall Street, crash, recession,