Bradford and Bingley bought by the Governmentq

Discussion in 'Politics, Religion, Social Issues' started by neiltc13, Sep 27, 2008.

  1. neiltc13 macrumors 68040

    neiltc13

    Joined:
    May 27, 2006
    #1
    The BBC are running a story tonight saying that Bradford and Bingley has been acquired by the Government:

    I really don't understand all of this well enough to make any sort of an informed judgement, but it strikes me that we the taxpayer are now simply picking up the bill for all the terrible areas of the business rather than allowing it to go bankrupt. I don't see why the Government is protecting the interests of shareholders of a company when they should have known the risks when they invested.

    Is there anyone here who can shed more light on the subject?

    PS: I can't edit the thread title so that mischievous q will have to stay until a moderator gets here!
     
  2. Ugg macrumors 68000

    Ugg

    Joined:
    Apr 7, 2003
    Location:
    Penryn
    #2
    I'm not totally clear on British banking regulations, especially in regards to the laws put into place by the FSA after the nationalization of Northern Rock. However, from the article:

    Here in the US, shareholders automatically lose their interest in a bank when it is taken over by the government. The recent takeover of Washington Mutual is a prime example.

    If the FSA is able to make a profit on the takeover, it might reimburse shareholders. Given the current economic situation, that's highly doubtful
     
  3. neiltc13 thread starter macrumors 68040

    neiltc13

    Joined:
    May 27, 2006
    #3
    Yeah, but what I don't understand is why the Government is going to nationalise it only to sell its assets instantly. Why can't the bank just be treated like any other company in this situation?

    What exactly is so precious about these banks that the Governments of the world have to intervene instead of letting capitalism run its course?
     

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