Sub prime risks for the UK

We tend to think of the sub-prime mortgage crisis as being largely concentrated in the United States. But there is a growing body of evidence that some parts of the UK are also heavily exposed to the risks of a sub-prime crisis. The Financial Times today carries an interactive map which highlights those towns and cities thought to be most at threat from a rise in housing repossessions. According to research from FitchRatings, mortgages made to subprime borrowers – home owners with a shaky credit history – account for 10 to 11 per cent of all private homes in six UK towns - namely Newport, Wales; Cleveland, Teesside; Wolverhampton; Cardiff; Manchester; and Galashiels, Scotland.

Government failure and the Rock

Well here is one for the file on classic examples of regulatory (aka government) failure in the market. The Financial Services Authority (FSA) has admitted that it gave too few resources over to monitoring the problems building up at Northern Rock - covered in this BBC article and also this piece in the Financial Times. The FSA seems to have been assuming that the Bank of England stood ready to bale out the Northern Rock and there were failings in the oversight of the Rock by supervisory teams sent to look at the Rock’s flawed business model. None of this will be any comfort to the shareholders and also to the thousands of Rock employees who will lose their job. Robert Peston is brilliant on this issue - here is his latest blog which lays bare the blundering at the FSA and the shocking incompetence of their senior management.

How the Banks Bet Your Money

Dispatches (Channel 4), this coming Monday, 8pm, looks well worth a watch. A global credit crunch has put Britain’s banks in a crisis that threatens the future of jobs and businesses and may even trigger a wholesale recession.In this edition of Dispatches, private equity financier and alchemist Jon Moulton delivers a stinging rebuke to the banks for causing this financial meltdown and explains why the British taxpayer will now pay the price.