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In: Accounting

Evaluation the Northern Rock is nationalised, which is good or bad? why ? (at least 150...

Evaluation the Northern Rock is nationalised, which is good or bad? why ? (at least 150 words)

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Expert Solution

Northern Rock Bank was nationalised in February, 2008 as a result of the sub prime mortgage crisis of 2008.

It is a good thing that the Labour Party of Britain bailed out the bank and protected the employees, the investors of deposits and their interest earnings. This was done after two previous bids to take over by the private investors failed as the potential investors could not guarantee the interests of the depositers. Like in any other mature and responsible government , the fall out of bankruptcy and closure of the bank would have hurt the Bank's genuine deposit holders of their hard earned savings.

But any such takeover and nationalisation move must have its own list of lessons that the govt must demonstrate to the tax paying citizens , whose money is used to bail the bank. It must bring to task the Senior Management and its key decision makers who have caused the loss to the bank. Further, it has to also ensure that there is sufficient clean up of the bank policies and procedures so that it would never create a similar situation in the future.


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