Archive article from The Socialist Issue 516
Link to this page: http://www.socialistparty.org.uk/2008/516/np2429.htm
Nationalise Northern Rock - permanently
THE LABOUR government is still desperate to find a private-sector buyer for Northern Rock, despite having shored up the bank to the tune of £50 billion (over half the NHS budget).
The bank went belly-up last September after Northern Rock's board speculated in financial markets and was caught out by the US sub-prime mortgage crisis.
The media has stories about the 180,000 small shareholders (who hold 20% of the stock) worrying that their investments will become valueless if Northern Rock is nationalised. But the real scandal is the role played by hedge fund shareholders.
When Northern Rock's shares nosedived, prompting a government bailout, two hedge funds - SRM Global and RAB Capital - snapped them up (they now own 18%) intending to make a big profit when the bank was sold on.
But faced with nationalisation - which the government may be forced to resort to - they could have their fingers burned. The hedge funds now want to limit Northern Rock's board's ability to sell or buy assets and issue new shares to stop a quick sell-off.
The bank should be nationalised - not as a temporary measure as demanded by sections of the capitalist class - with no compensation to the fat-cat speculators. Small shareholders should be compensated on the basis of proven need.
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