Posted by Jim Lindgren:
UK run on Northern Rock Savings Accounts Continues.--
http://volokh.com/archives/archive_2007_09_16-2007_09_22.shtml#1190043705
Although a couple of weeks ago the limited run on Nationwide Banks in
the US was quickly stemmed, the [1]run on Northern Rock in the UK
continues for at least the third straight business day on Monday (via
the [2]Guardian):
Thousands of anxious savers besieged branches of Northern Rock this
morning [Monday] as the run on the crisis-hit mortgage bank
gathered pace.
Its shares plummeted by 34% to 290p within the opening minutes of
trading on the stock market today. This follows Friday's 30% share
price collapse at the group, Britain's fifth-largest mortgage
lender, which has lost three-quarters of its value over the past 12
months.
There were heavy losses among other banks, with Alliance &
Leicester down more than 10% and Bradford & Bingley down around 9%.
As much as £2bn is believed to have been withdrawn from Northern
Rock accounts on Friday and Saturday, although many online
customers were unable to access their funds. The current share
price gives the bank a market capitalisation of £1.3bn.
Queues started forming in the early hours this morning, with some
customers arriving as early as 3am.
In Leeds, around 100 people were queuing outside the Northern Rock
on Briggate. Some had even brought chairs and flasks to make their
wait more comfortable. . . .
Caroline Clarkson, 39, said she was frustrated by the bank's
response to the crisis. She said: "When you phone them, you can't
get through and when you go to the website, it just crashes.
"When you read all the reports over the weekend and you think about
your money, I decided it just was not worth the risk. Why risk it
when I can take it out today and put it in another account?"
At a branch in Liverpool, one woman, who left clutching a handbag
packed with around £3,000 with the strap double-wrapped around her
shoulders, said: "It is not much but it's all I have in the world.
"But then, when I think of the staff inside, not knowing how this
will turn out and their whole livelihoods are at stake, I feel
rotten."
Usually the day before a US Federal Reserve rate cut (expected
Tuesday) is an up day in the US stock market, as is the day of a rate
cut, but today the US stock market is struggling against European
pessimism. Further, the first of the major US brokers (Lehman) reports
earnings on Tuesday, which could be either disastrous or surprisingly
solid. If you know which way the market will move today and tomorrow,
you are smarter than the rest of us.
References
1.
http://money.guardian.co.uk/saving/banks/story/0,,2170900,00.html#article_continue
2.
http://money.guardian.co.uk/saving/banks/story/0,,2170900,00.html#article_continue
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