Downing Street Says » Northern Rock

Asked what was said at Cabinet regarding Northern Rock, the PMS said that this issue was discussed in the context of a much wider discussion about the economy and the economic situation, lead by the Chancellor. It was a brief update; the Chancellor reminded Cabinet colleagues that the situation relating to Northern Rock arose originally because of the particular business model that Northern Rock was adopting; that Northern Rock had no ‘Pan B when the market turned against them; that the Government had to intervene in order to stop contagion and that that intervention was successful in stopping contagion to other parts of the financial sector. The Chancellor also said that we continued to explore all options, including nationalisation, because to rule out any option at this point would be, in the view if the Chancellor and the Prime Minister, irresponsible. The Chancellor made many of these points regarding Northern Rock in his speech this morning.

Asked if there was any idea when a decision would be made regarding Northern Rock, the PMS replied that there was a very thorough process of exploration of options underway; of course it was right that, in relation to a matter of this scale and significance, all options were properly explored. Insofar as particular announcements on timing, we would let people know.

Asked if there was any disquiet at Cabinet about the nationalisation of Northern Rock, the PMS replied that there was not really that much of a discussion about Northern Rock; the discussion was more about the general economic situation.

Asked what the Prime Minister’s attitude was regarding big hedge funds, based overseas, buying up shares, the PMS replied that the Prime Minister’s general position in relation to Northern Rock, as he mad made very clear, was that the priorities for the Government were to ensure that we protected the interest of tax payers, depositors and savers in the economy and that action was taken in order to promote wider financial stability. It was on the basis of these objectives that the Government would take action in relation to Northern Rock.

Asked if the Prime Minister had any view on the Cayman Islands hedge funds, the PMS said that there was nothing that he could add which would be any more helpful. He repeated that the priority was to protect the interest of taxpayers, depositors and savers and the stability of the wider financial system.

Asked if the Prime Minister had a view on the meeting of Northern Rock shareholders today, the PMS said that that was a matter for the shareholders and the board of Northern Rock. The Government had set out its position very clearly.

Asked what the Chancellor’s tone was regarding the economy in general, the PMS said that his general tone was that we were facing a difficult period in the world economy at the moment, originating from what happened in US financial markets, but that in Britain we were well placed to withstand this global uncertainty as long as we continued to make the right long-term decisions.

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» Tuesday, January 15, 2008

Northern Rock

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