Word: panic
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Dates: during 2000-2009
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With confidence in the U.K.'s banking system stretched, the government felt it had little choice but to step in with a definitive gesture to stem the panic. In an unprecedented move, the Treasury announced on Sept. 17 that it would guarantee all deposits held with Northern Rock. "I want to put the matter beyond doubt," announced Alistair Darling, the Chancellor of the Exchequer, putting British taxpayers on the hook for billions of dollars of Northern Rock deposits in the (extremely unlikely) event it did default. Users' cash squirreled away at the bank, he said, "will be guaranteed safe...
Part of the panic surely rests with the U.K.'s relatively modest deposit insurance system. Only deposits of up to around $63,000 are protected under the U.K.'s industry-funded Financial Services Compensation Scheme. Britons stashing away more than that have no legal guarantee they will see their savings again if their bank fails. Higher insurance caps - in the U.S., for instance, the Federal Deposit Insurance Corporation guarantees depositors up to $100,000 - would have done much to thin the lines. Keen to avoid the kind of panic triggered among Northern Rock's savers, the Treasury, the Bank...
...savers at British bank Northern Rock, the days of worry may be waning. But it took a bold intervention by the U.K government to accomplish. Hoping to stem depositors' panic about the Northern Rock's solvency after it announced last week that it had requested an emergency line of credit from the Bank of England (lengthy lines of customers waiting to withdraw their savings have been a frequent sight outside Northern Rock branches for days), Alistair Darling, Britain's Chancellor of the Exchequer announced yesterday that the government itself would guarantee the bank's customers' money in the (very unlikely...
...Until Monday's grand gesture, the more the authorities tried to sooth, it seemed, the greater the panic. With no sign of the run on Northern Rock ending - savers have so far yanked out well over $4 billion - the panic began to spread. Alliance & Leicester's stock plummeted by almost a third on Monday despite a statement insisting its business was solid; shares in Bradford & Bingley dropped by 15%. Desperate to restore order, the U.K. Treasury put its own money (meaning the public's money) down. "I want to put the matter beyond doubt," Darling said. Customers' cash held...
...panic? Late Thursday, it emerged that the Bank of England had agreed emergency credit for Northern Rock, Britain's fifth-largest mortgage provider and the U.K.'s first bank to be left reeling from the global credit crunch. Jitters in the credit markets were triggered by the collapse of a U.S. subprime mortgage sector built on lending to home buyers with poor credit histories. With that risky debt having been spliced, repackaged and flogged to banks around the world, financial institutions are less keen to lend each other cash. And when they do, they're charging each other more...