Word: creditably
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...limited branch network meant savings chipped in by its own customers amounted to a smaller chunk of the funds it could lend in the form of mortgages. So the company turned instead to other banks for cash. The result: three-quarters of its funds were borrowed from the wholesale credit markets, versus around half at rival mortgage bank Alliance & Leicester and 25% at Bradford & Bingley. "For years," says Wheeldon, "they made the wholesale markets work for them...
Eventually, those markets stopped working so well. The collapse of a U.S. subprime mortgage sector built on lending to home buyers with poor credit histories has given global credit markets the jitters. With that risky debt spliced, repackaged and sold around the world, uncertainty over just who was exposed to the debt - and to what extent - meant that rather than lending around their cash, banks have taken to hoarding...
...future change in the limits is little consolation for Northern Rock now. Although the bank runs have stopped, it still faces formidable challenges. The credit crunch and dry interbank lending market will make it more difficult for Northern Rock to finance new mortgages at competitive rates. And with its share price still in tatters, it could soon find itself bought out by rivals. (Its stock slumped again on Sept. 19, amid rumors of an imminent takeover bid.) Are other British banks similarly vulnerable? Less so, since they never relied on the credit markets to the degree Northern Rock did. Even...
...meantime, just as central banks in the U.S. and euro zone have pumped cheap cash into money markets to boost liquidity in recent weeks, the Bank of England announced plans to inject almost $30 billion into the U.K. system after the credit squeeze nudged up the rates banks were charging each other to borrow. The longer those rates remain high, the more mortgage providers will be forced to pass on the costs to homeowners, increasing the chances of a consumer spending slowdown and a weakening economy. That prospect - and the dramatic half percentage point...
Everywhere you turn these days, there's cause for panic. The news is filled with talk of a global credit crisis. American homeowners are defaulting on their loans and housing-related stocks have crashed. The dollar is doing a disappearing act. Alan Greenspan, after years of artful obfuscation, has suddenly discovered a terrifying gift for clarity, warning that inflation will rise and house prices will tumble. Stock market volatility has surged. And now, feeding fears that the contagion is spreading, the British bank Northern Rock has suffered a near-death experience...