Why northern rock collapse

In an interview with the BBC Gary Hoffman, who was parachuted in as chief executive after privatisation, said he found an organisation with an unquestioning - and unhappy - culture. There was an attitude that you did not question what was going on, which was a tragedy because there were extremely good people at the bank. Hoffman reveals that the Treasury had considered all options for the future of the bank when he was in charge - not just a sale to a banking rival, but also a refloating of the bank as an independent business, and its complete run-down and closure.

Other senior banking sources have told the BBC that the last option - closure - was the favourite right up until Christmas Eve , when the bank's leadership was able to convince the Treasury it could be sold as a going concern.

Mr Hoffman says that the UK's banking sector is now safer than in the run-up to the crisis, with greater capital reserves at the big institutions. Others disagree, however, saying the increases have been largely illusory. Kevin Dowd, professor of finance and economics at the University of Durham, says changes in bank regulations have not greatly improved banks' resilience.

But if you look at the stock market, investors don't believe it because most of our big banks have stock market values less than their book values. How N Rock crisis improved savings safety. Bank bailout 'should have been secret'. Image source, Getty Images. Can central bank provision of market liquidity create a problem of moral hazard? Alistair Milne. Goodhart; Robert A. Kaufman; Paul Hamalainen; Rosa M. Lastra; David T.

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