Northern Rock nationalisation: could it happen again?

Institutional investors are threatening to sue the Government over the nationalisation of Northern Rock. But for the rest of us the key issues are: who's to blame, and will taxpayers get saddled with any more ailing banks?

Now that you and I own Northern Rock it is time to draw a few conclusions and apportion a bit of blame. It is also time to raise a cheer for at least one reason. Funds managed by hedge fund geniuses Jon Wood and Philip Richards will probably lose about £200m. I am not sure that investors in their funds deserve to be victims but the reputations of Wood and Richards will take a well-earned plunge.

These guys jumped aboard Northern Rock once the crisis broke. Exactly what prompted them to invest £200m in a bank that clearly had no future and was to all intents and purposes bust is not exactly clear. But apart from a desire to grab headlines and pose as serious financial players they presumably thought that either Northern Rock would be taken over or that some sort of financial rescue package would be stitched together from which Northern Rock, and its share price, could stage a miraculous recovery.

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