Britain to nationalize mortgage lender

[Ex-SD]

LONDON – Treasury chief Alistair Darling said Sunday that struggling bank Northern Rock PLC will be nationalized after the government rejected two private takeover bids.

Darling told a news conference that the ailing mortgage lender would be placed under temporary public ownership because both bids had failed to meet the government’s demands.

http://www.msnbc.msn.com/id/23210466/

[34f3f3f]

I’m not sure how you reconcile “temporary national ownership” and “nationalize”, but it would a pretty safe place to put your money if it’s government backed. My understanding is that Northern Rock was lending out three times what it had in reserves, which is just under three times the national average. Levels of debt in the UK are said to be higher than the US, incomes are usually lower, house prices are very high, and lending practices somewhat lax. The UK, Ireland and Spain are all in for a rude awakening.

[gdcox]

Graham

A few facts from across the pond for interest. Northern Rock depended on securitizing the bulk of the loans it made and funded most of its balance sheet form interbank deposits. Its stupid business model ensured it would become bankrupt through liquidity one day. Its net asset position is good.

Lending standards are far higher in the UK than in the US and especially SD from what I read on this fascinating site. There has been no Bush government here to stop the regulators keeping a close eye on the actions of brokers for example.It is far from perfect but an order of magnitude less bad than in SD I would say.

Our house price to incomes ratio is very high in the UK . However, unlike most of the US , there is a severe shortage of land due to incredibly tight out of town planning rules. So demand and supply are quite well matched and thus there is little price weakness and hence very little of what is perceptibly described on this site as ‘bubble foreclosures’. Foreclosures are rising due to higher interest rates caused by the credit crisis interacting with the excessive overall indebtedness of some people.

A mixed picture: eg http://www.bloomberg.com/apps/news?pid=20601087&sid=aTmi4vMk92U8&refer=home

[gdcox]

Graham

A few facts from across the pond for interest. Northern Rock depended on securitizing the bulk of the loans it made and funded most of its balance sheet form interbank deposits. Its stupid business model ensured it would become bankrupt through liquidity one day. Its net asset position is good.

Lending standards are far higher in the UK than in the US and especially SD from what I read on this fascinating site. There has been no Bush government here to stop the regulators keeping a close eye on the actions of brokers for example.It is far from perfect but an order of magnitude less bad than in SD I would say.

Our house price to incomes ratio is very high in the UK . However, unlike most of the US , there is a severe shortage of land due to incredibly tight out of town planning rules. So demand and supply are quite well matched and thus there is little price weakness and hence very little of what is perceptibly described on this site as ‘bubble foreclosures’. Foreclosures are rising due to higher interest rates caused by the credit crisis interacting with the excessive overall indebtedness of some people.

A mixed picture: eg http://www.bloomberg.com/apps/news?pid=20601087&sid=aTmi4vMk92U8&refer=home

[gdcox]

Graham

A few facts from across the pond for interest. Northern Rock depended on securitizing the bulk of the loans it made and funded most of its balance sheet form interbank deposits. Its stupid business model ensured it would become bankrupt through liquidity one day. Its net asset position is good.

Lending standards are far higher in the UK than in the US and especially SD from what I read on this fascinating site. There has been no Bush government here to stop the regulators keeping a close eye on the actions of brokers for example.It is far from perfect but an order of magnitude less bad than in SD I would say.

Our house price to incomes ratio is very high in the UK . However, unlike most of the US , there is a severe shortage of land due to incredibly tight out of town planning rules. So demand and supply are quite well matched and thus there is little price weakness and hence very little of what is perceptibly described on this site as ‘bubble foreclosures’. Foreclosures are rising due to higher interest rates caused by the credit crisis interacting with the excessive overall indebtedness of some people.

A mixed picture: eg http://www.bloomberg.com/apps/news?pid=20601087&sid=aTmi4vMk92U8&refer=home

[gdcox]

Graham

A few facts from across the pond for interest. Northern Rock depended on securitizing the bulk of the loans it made and funded most of its balance sheet form interbank deposits. Its stupid business model ensured it would become bankrupt through liquidity one day. Its net asset position is good.

Lending standards are far higher in the UK than in the US and especially SD from what I read on this fascinating site. There has been no Bush government here to stop the regulators keeping a close eye on the actions of brokers for example.It is far from perfect but an order of magnitude less bad than in SD I would say.

Our house price to incomes ratio is very high in the UK . However, unlike most of the US , there is a severe shortage of land due to incredibly tight out of town planning rules. So demand and supply are quite well matched and thus there is little price weakness and hence very little of what is perceptibly described on this site as ‘bubble foreclosures’. Foreclosures are rising due to higher interest rates caused by the credit crisis interacting with the excessive overall indebtedness of some people.

A mixed picture: eg http://www.bloomberg.com/apps/news?pid=20601087&sid=aTmi4vMk92U8&refer=home

[gdcox]

Graham

A few facts from across the pond for interest. Northern Rock depended on securitizing the bulk of the loans it made and funded most of its balance sheet form interbank deposits. Its stupid business model ensured it would become bankrupt through liquidity one day. Its net asset position is good.

Lending standards are far higher in the UK than in the US and especially SD from what I read on this fascinating site. There has been no Bush government here to stop the regulators keeping a close eye on the actions of brokers for example.It is far from perfect but an order of magnitude less bad than in SD I would say.

Our house price to incomes ratio is very high in the UK . However, unlike most of the US , there is a severe shortage of land due to incredibly tight out of town planning rules. So demand and supply are quite well matched and thus there is little price weakness and hence very little of what is perceptibly described on this site as ‘bubble foreclosures’. Foreclosures are rising due to higher interest rates caused by the credit crisis interacting with the excessive overall indebtedness of some people.

A mixed picture: eg http://www.bloomberg.com/apps/news?pid=20601087&sid=aTmi4vMk92U8&refer=home

[patientlywaiting]

I believe that ex-sd got it right “temporary national ownership” is just euphemism for “nationalize.”

How long is temporary? 1 year that could turn into 10 years.

gdcox, I’ve not followed the Northern Rock affair. But talking about moral hazard, why would the government nationalize it rather and paying-off the depositors and letting it fail. Who is the government trying to bail out here?

[4plexowner]

Or could it be that the process of selling the bank publicly would shine too much sunlight onto the worthless derivative paper being held by the bank?

“In addition, Northern Rock enters into certain derivative contracts, which although efficient economically, cannot be included in effective hedge accounting relationships. Consequently, although the implicit interest cost of the underlying instrument and associated derivative are included in net interest income in the income statement, future fair value movements on such derivatives are recorded in “Net hedge ineffectiveness and other fair value gains and losses” on the face of the income statement and are excluded from underlying results.”

http://companyinfo.northernrock.co.uk/investorRelations/results/stockEx062607.asp

The snippet above is from Northern Rock’s report on its performance in the 1st half of 2006

My interpretation of the snippet above: “We are going to count any income from these derivatives as an asset but hide all the losses via accounting legerdemain.”

[4plexowner]

Or could it be that the process of selling the bank publicly would shine too much sunlight onto the worthless derivative paper being held by the bank?

“In addition, Northern Rock enters into certain derivative contracts, which although efficient economically, cannot be included in effective hedge accounting relationships. Consequently, although the implicit interest cost of the underlying instrument and associated derivative are included in net interest income in the income statement, future fair value movements on such derivatives are recorded in “Net hedge ineffectiveness and other fair value gains and losses” on the face of the income statement and are excluded from underlying results.”

http://companyinfo.northernrock.co.uk/investorRelations/results/stockEx062607.asp

The snippet above is from Northern Rock’s report on its performance in the 1st half of 2006

My interpretation of the snippet above: “We are going to count any income from these derivatives as an asset but hide all the losses via accounting legerdemain.”

[4plexowner]

Or could it be that the process of selling the bank publicly would shine too much sunlight onto the worthless derivative paper being held by the bank?

“In addition, Northern Rock enters into certain derivative contracts, which although efficient economically, cannot be included in effective hedge accounting relationships. Consequently, although the implicit interest cost of the underlying instrument and associated derivative are included in net interest income in the income statement, future fair value movements on such derivatives are recorded in “Net hedge ineffectiveness and other fair value gains and losses” on the face of the income statement and are excluded from underlying results.”

http://companyinfo.northernrock.co.uk/investorRelations/results/stockEx062607.asp

The snippet above is from Northern Rock’s report on its performance in the 1st half of 2006

My interpretation of the snippet above: “We are going to count any income from these derivatives as an asset but hide all the losses via accounting legerdemain.”

[4plexowner]

Or could it be that the process of selling the bank publicly would shine too much sunlight onto the worthless derivative paper being held by the bank?

“In addition, Northern Rock enters into certain derivative contracts, which although efficient economically, cannot be included in effective hedge accounting relationships. Consequently, although the implicit interest cost of the underlying instrument and associated derivative are included in net interest income in the income statement, future fair value movements on such derivatives are recorded in “Net hedge ineffectiveness and other fair value gains and losses” on the face of the income statement and are excluded from underlying results.”

http://companyinfo.northernrock.co.uk/investorRelations/results/stockEx062607.asp

The snippet above is from Northern Rock’s report on its performance in the 1st half of 2006

My interpretation of the snippet above: “We are going to count any income from these derivatives as an asset but hide all the losses via accounting legerdemain.”

[4plexowner]

Or could it be that the process of selling the bank publicly would shine too much sunlight onto the worthless derivative paper being held by the bank?

“In addition, Northern Rock enters into certain derivative contracts, which although efficient economically, cannot be included in effective hedge accounting relationships. Consequently, although the implicit interest cost of the underlying instrument and associated derivative are included in net interest income in the income statement, future fair value movements on such derivatives are recorded in “Net hedge ineffectiveness and other fair value gains and losses” on the face of the income statement and are excluded from underlying results.”

http://companyinfo.northernrock.co.uk/investorRelations/results/stockEx062607.asp

The snippet above is from Northern Rock’s report on its performance in the 1st half of 2006

My interpretation of the snippet above: “We are going to count any income from these derivatives as an asset but hide all the losses via accounting legerdemain.”

[34f3f3f]

I visited the Northern Rock site, and the first thing that greets you is a message assuring depositors. Weird! I did manage to glean from the site that “temporary national ownership” will last for as long as credit problems persist, or words to that effect. And for any one who may have been interested in their new security guarantee, US residents can’t open an account with them for some reason. As to whether UK lending standards are tighter or more lax than the US, I’m not sure how you would go about measuring this except in the mess it usually leaves behind, so it’s a case of wait and see.

[34f3f3f]

I visited the Northern Rock site, and the first thing that greets you is a message assuring depositors. Weird! I did manage to glean from the site that “temporary national ownership” will last for as long as credit problems persist, or words to that effect. And for any one who may have been interested in their new security guarantee, US residents can’t open an account with them for some reason. As to whether UK lending standards are tighter or more lax than the US, I’m not sure how you would go about measuring this except in the mess it usually leaves behind, so it’s a case of wait and see.

[34f3f3f]

I visited the Northern Rock site, and the first thing that greets you is a message assuring depositors. Weird! I did manage to glean from the site that “temporary national ownership” will last for as long as credit problems persist, or words to that effect. And for any one who may have been interested in their new security guarantee, US residents can’t open an account with them for some reason. As to whether UK lending standards are tighter or more lax than the US, I’m not sure how you would go about measuring this except in the mess it usually leaves behind, so it’s a case of wait and see.

[34f3f3f]

I visited the Northern Rock site, and the first thing that greets you is a message assuring depositors. Weird! I did manage to glean from the site that “temporary national ownership” will last for as long as credit problems persist, or words to that effect. And for any one who may have been interested in their new security guarantee, US residents can’t open an account with them for some reason. As to whether UK lending standards are tighter or more lax than the US, I’m not sure how you would go about measuring this except in the mess it usually leaves behind, so it’s a case of wait and see.

[34f3f3f]

I visited the Northern Rock site, and the first thing that greets you is a message assuring depositors. Weird! I did manage to glean from the site that “temporary national ownership” will last for as long as credit problems persist, or words to that effect. And for any one who may have been interested in their new security guarantee, US residents can’t open an account with them for some reason. As to whether UK lending standards are tighter or more lax than the US, I’m not sure how you would go about measuring this except in the mess it usually leaves behind, so it’s a case of wait and see.

[patientlywaiting]

I believe that ex-sd got it right “temporary national ownership” is just euphemism for “nationalize.”

How long is temporary? 1 year that could turn into 10 years.

gdcox, I’ve not followed the Northern Rock affair. But talking about moral hazard, why would the government nationalize it rather and paying-off the depositors and letting it fail. Who is the government trying to bail out here?

[patientlywaiting]

I believe that ex-sd got it right “temporary national ownership” is just euphemism for “nationalize.”

How long is temporary? 1 year that could turn into 10 years.

gdcox, I’ve not followed the Northern Rock affair. But talking about moral hazard, why would the government nationalize it rather and paying-off the depositors and letting it fail. Who is the government trying to bail out here?

[patientlywaiting]

I believe that ex-sd got it right “temporary national ownership” is just euphemism for “nationalize.”

How long is temporary? 1 year that could turn into 10 years.

gdcox, I’ve not followed the Northern Rock affair. But talking about moral hazard, why would the government nationalize it rather and paying-off the depositors and letting it fail. Who is the government trying to bail out here?

[patientlywaiting]

I believe that ex-sd got it right “temporary national ownership” is just euphemism for “nationalize.”

How long is temporary? 1 year that could turn into 10 years.

gdcox, I’ve not followed the Northern Rock affair. But talking about moral hazard, why would the government nationalize it rather and paying-off the depositors and letting it fail. Who is the government trying to bail out here?

[34f3f3f]

I’m not sure how you reconcile “temporary national ownership” and “nationalize”, but it would a pretty safe place to put your money if it’s government backed. My understanding is that Northern Rock was lending out three times what it had in reserves, which is just under three times the national average. Levels of debt in the UK are said to be higher than the US, incomes are usually lower, house prices are very high, and lending practices somewhat lax. The UK, Ireland and Spain are all in for a rude awakening.

[34f3f3f]

I’m not sure how you reconcile “temporary national ownership” and “nationalize”, but it would a pretty safe place to put your money if it’s government backed. My understanding is that Northern Rock was lending out three times what it had in reserves, which is just under three times the national average. Levels of debt in the UK are said to be higher than the US, incomes are usually lower, house prices are very high, and lending practices somewhat lax. The UK, Ireland and Spain are all in for a rude awakening.

[34f3f3f]

I’m not sure how you reconcile “temporary national ownership” and “nationalize”, but it would a pretty safe place to put your money if it’s government backed. My understanding is that Northern Rock was lending out three times what it had in reserves, which is just under three times the national average. Levels of debt in the UK are said to be higher than the US, incomes are usually lower, house prices are very high, and lending practices somewhat lax. The UK, Ireland and Spain are all in for a rude awakening.

[34f3f3f]

I’m not sure how you reconcile “temporary national ownership” and “nationalize”, but it would a pretty safe place to put your money if it’s government backed. My understanding is that Northern Rock was lending out three times what it had in reserves, which is just under three times the national average. Levels of debt in the UK are said to be higher than the US, incomes are usually lower, house prices are very high, and lending practices somewhat lax. The UK, Ireland and Spain are all in for a rude awakening.

[4plexowner]

From a 2004 EdgarOnline report inre Northern Rock
(http://sec.edgar-online.com/2004/06/01/0000905148-04-002681/Section15.asp):

The Board has authorized the use of derivative instruments for the purpose of supporting the strategic and operational business activities of the Group and reducing the risk of loss arising from changes in interest rates and exchange rates. All use of derivative instruments within the Group is to hedge risk exposure, and the Group takes no trading positions in derivatives.

For the purpose of reducing interest rate risk and currency risk, the Group uses a number of derivative instruments. These comprise interest rate swaps, interest rate options, forward rate agreements, interest rate and bond futures, currency swaps and forward foreign exchange contracts.

…

The benefits of using off-balance sheet derivative instruments are measured by examining the anticipated consequences of not hedging the perceived risk in terms of revenue or capital loss.

~

So, not only are derivatives a good thing, there are even more benefits to having them off the balance sheet …

[patientlywaiting]

From the article:
“However, critics said that the temporary nationalization proposed by the government could last years as Northern Rock’s new management seeks to pay back around 55 billion pounds ($107 billion) via loans from the Bank of England and deposit guarantees.”

http://news.yahoo.com/s/afp/20080218/wl_uk_afp/britainbankingnationalisationcompany_080218132113?
“It has since borrowed an estimated 26 billion pounds from the British central bank, although media reports have put the actual liability to taxpayers at 55 billion pounds or
higher.”

*

Looks like that one bank is losing just about the amount that all US banks have written off so far.

It’s unclear how much the UK gov’t will be able to sell Northern Rock for but it’s gonna be a big chunk for the taxpayers to absorb.

To put it into context the US stimulus package will cost $168 billion. Nothern Rock alone is cost the brits $107 billion or 64% of the stimulus package.

http://www.nytimes.com/2008/02/08/washington/08fiscal.html?_r=1&oref=slogin

[Deal Hunter]

The numbers are not even close. The US bank write-offs are $1 Trillion so far. Remember LTCM? That was also $1 Trillion and that was just one hedge fund. We’re talking about the total of $11 Trillion in mortgage debt in the top 5 US banks.

As of January 2008, write offs are estimated to be $244 Billion from subprime and $700 billion from derivatives. My bets for banks that will close shop this year are Morgan Stanley and Citigroup.

[patientlywaiting]

I wouldn’t be surprised that losses will be in the trillions.

But how much was written off so far? I don’t following banking but I’d love to know. I keep reading $100 billion so far with 300 billion to go.

http://articles.moneycentral.msn.com/Investing/CompanyFocus/WhosToBlameForTheMortgageMess.aspx

Looks like the updated amount is $175 billion so far?

http://money.cnn.com/2008/02/11/news/companies/writedowns/index.htm?section=money_topstories

[patientlywaiting]

I wouldn’t be surprised that losses will be in the trillions.

But how much was written off so far? I don’t following banking but I’d love to know. I keep reading $100 billion so far with 300 billion to go.

http://articles.moneycentral.msn.com/Investing/CompanyFocus/WhosToBlameForTheMortgageMess.aspx

Looks like the updated amount is $175 billion so far?

http://money.cnn.com/2008/02/11/news/companies/writedowns/index.htm?section=money_topstories

[patientlywaiting]

I wouldn’t be surprised that losses will be in the trillions.

But how much was written off so far? I don’t following banking but I’d love to know. I keep reading $100 billion so far with 300 billion to go.

http://articles.moneycentral.msn.com/Investing/CompanyFocus/WhosToBlameForTheMortgageMess.aspx

Looks like the updated amount is $175 billion so far?

http://money.cnn.com/2008/02/11/news/companies/writedowns/index.htm?section=money_topstories

[patientlywaiting]

I wouldn’t be surprised that losses will be in the trillions.

But how much was written off so far? I don’t following banking but I’d love to know. I keep reading $100 billion so far with 300 billion to go.

http://articles.moneycentral.msn.com/Investing/CompanyFocus/WhosToBlameForTheMortgageMess.aspx

Looks like the updated amount is $175 billion so far?

http://money.cnn.com/2008/02/11/news/companies/writedowns/index.htm?section=money_topstories

[patientlywaiting]

I wouldn’t be surprised that losses will be in the trillions.

But how much was written off so far? I don’t following banking but I’d love to know. I keep reading $100 billion so far with 300 billion to go.

http://articles.moneycentral.msn.com/Investing/CompanyFocus/WhosToBlameForTheMortgageMess.aspx

Looks like the updated amount is $175 billion so far?

http://money.cnn.com/2008/02/11/news/companies/writedowns/index.htm?section=money_topstories

[Deal Hunter]

The numbers are not even close. The US bank write-offs are $1 Trillion so far. Remember LTCM? That was also $1 Trillion and that was just one hedge fund. We’re talking about the total of $11 Trillion in mortgage debt in the top 5 US banks.

As of January 2008, write offs are estimated to be $244 Billion from subprime and $700 billion from derivatives. My bets for banks that will close shop this year are Morgan Stanley and Citigroup.

[Deal Hunter]

The numbers are not even close. The US bank write-offs are $1 Trillion so far. Remember LTCM? That was also $1 Trillion and that was just one hedge fund. We’re talking about the total of $11 Trillion in mortgage debt in the top 5 US banks.

As of January 2008, write offs are estimated to be $244 Billion from subprime and $700 billion from derivatives. My bets for banks that will close shop this year are Morgan Stanley and Citigroup.

[Deal Hunter]

The numbers are not even close. The US bank write-offs are $1 Trillion so far. Remember LTCM? That was also $1 Trillion and that was just one hedge fund. We’re talking about the total of $11 Trillion in mortgage debt in the top 5 US banks.

As of January 2008, write offs are estimated to be $244 Billion from subprime and $700 billion from derivatives. My bets for banks that will close shop this year are Morgan Stanley and Citigroup.

[Deal Hunter]

The numbers are not even close. The US bank write-offs are $1 Trillion so far. Remember LTCM? That was also $1 Trillion and that was just one hedge fund. We’re talking about the total of $11 Trillion in mortgage debt in the top 5 US banks.

As of January 2008, write offs are estimated to be $244 Billion from subprime and $700 billion from derivatives. My bets for banks that will close shop this year are Morgan Stanley and Citigroup.

[patientlywaiting]

From the article:
“However, critics said that the temporary nationalization proposed by the government could last years as Northern Rock’s new management seeks to pay back around 55 billion pounds ($107 billion) via loans from the Bank of England and deposit guarantees.”

http://news.yahoo.com/s/afp/20080218/wl_uk_afp/britainbankingnationalisationcompany_080218132113?
“It has since borrowed an estimated 26 billion pounds from the British central bank, although media reports have put the actual liability to taxpayers at 55 billion pounds or
higher.”

*

Looks like that one bank is losing just about the amount that all US banks have written off so far.

It’s unclear how much the UK gov’t will be able to sell Northern Rock for but it’s gonna be a big chunk for the taxpayers to absorb.

To put it into context the US stimulus package will cost $168 billion. Nothern Rock alone is cost the brits $107 billion or 64% of the stimulus package.

http://www.nytimes.com/2008/02/08/washington/08fiscal.html?_r=1&oref=slogin

[patientlywaiting]

From the article:
“However, critics said that the temporary nationalization proposed by the government could last years as Northern Rock’s new management seeks to pay back around 55 billion pounds ($107 billion) via loans from the Bank of England and deposit guarantees.”

http://news.yahoo.com/s/afp/20080218/wl_uk_afp/britainbankingnationalisationcompany_080218132113?
“It has since borrowed an estimated 26 billion pounds from the British central bank, although media reports have put the actual liability to taxpayers at 55 billion pounds or
higher.”

*

Looks like that one bank is losing just about the amount that all US banks have written off so far.

It’s unclear how much the UK gov’t will be able to sell Northern Rock for but it’s gonna be a big chunk for the taxpayers to absorb.

To put it into context the US stimulus package will cost $168 billion. Nothern Rock alone is cost the brits $107 billion or 64% of the stimulus package.

http://www.nytimes.com/2008/02/08/washington/08fiscal.html?_r=1&oref=slogin

[patientlywaiting]

From the article:
“However, critics said that the temporary nationalization proposed by the government could last years as Northern Rock’s new management seeks to pay back around 55 billion pounds ($107 billion) via loans from the Bank of England and deposit guarantees.”

http://news.yahoo.com/s/afp/20080218/wl_uk_afp/britainbankingnationalisationcompany_080218132113?
“It has since borrowed an estimated 26 billion pounds from the British central bank, although media reports have put the actual liability to taxpayers at 55 billion pounds or
higher.”

*

Looks like that one bank is losing just about the amount that all US banks have written off so far.

It’s unclear how much the UK gov’t will be able to sell Northern Rock for but it’s gonna be a big chunk for the taxpayers to absorb.

To put it into context the US stimulus package will cost $168 billion. Nothern Rock alone is cost the brits $107 billion or 64% of the stimulus package.

http://www.nytimes.com/2008/02/08/washington/08fiscal.html?_r=1&oref=slogin

[patientlywaiting]

From the article:
“However, critics said that the temporary nationalization proposed by the government could last years as Northern Rock’s new management seeks to pay back around 55 billion pounds ($107 billion) via loans from the Bank of England and deposit guarantees.”

http://news.yahoo.com/s/afp/20080218/wl_uk_afp/britainbankingnationalisationcompany_080218132113?
“It has since borrowed an estimated 26 billion pounds from the British central bank, although media reports have put the actual liability to taxpayers at 55 billion pounds or
higher.”

*

Looks like that one bank is losing just about the amount that all US banks have written off so far.

It’s unclear how much the UK gov’t will be able to sell Northern Rock for but it’s gonna be a big chunk for the taxpayers to absorb.

To put it into context the US stimulus package will cost $168 billion. Nothern Rock alone is cost the brits $107 billion or 64% of the stimulus package.

http://www.nytimes.com/2008/02/08/washington/08fiscal.html?_r=1&oref=slogin

[4plexowner]

From a 2004 EdgarOnline report inre Northern Rock
(http://sec.edgar-online.com/2004/06/01/0000905148-04-002681/Section15.asp):

The Board has authorized the use of derivative instruments for the purpose of supporting the strategic and operational business activities of the Group and reducing the risk of loss arising from changes in interest rates and exchange rates. All use of derivative instruments within the Group is to hedge risk exposure, and the Group takes no trading positions in derivatives.

For the purpose of reducing interest rate risk and currency risk, the Group uses a number of derivative instruments. These comprise interest rate swaps, interest rate options, forward rate agreements, interest rate and bond futures, currency swaps and forward foreign exchange contracts.

…

The benefits of using off-balance sheet derivative instruments are measured by examining the anticipated consequences of not hedging the perceived risk in terms of revenue or capital loss.

~

So, not only are derivatives a good thing, there are even more benefits to having them off the balance sheet …

[4plexowner]

From a 2004 EdgarOnline report inre Northern Rock
(http://sec.edgar-online.com/2004/06/01/0000905148-04-002681/Section15.asp):

The Board has authorized the use of derivative instruments for the purpose of supporting the strategic and operational business activities of the Group and reducing the risk of loss arising from changes in interest rates and exchange rates. All use of derivative instruments within the Group is to hedge risk exposure, and the Group takes no trading positions in derivatives.

For the purpose of reducing interest rate risk and currency risk, the Group uses a number of derivative instruments. These comprise interest rate swaps, interest rate options, forward rate agreements, interest rate and bond futures, currency swaps and forward foreign exchange contracts.

…

The benefits of using off-balance sheet derivative instruments are measured by examining the anticipated consequences of not hedging the perceived risk in terms of revenue or capital loss.

~

So, not only are derivatives a good thing, there are even more benefits to having them off the balance sheet …

[4plexowner]

From a 2004 EdgarOnline report inre Northern Rock
(http://sec.edgar-online.com/2004/06/01/0000905148-04-002681/Section15.asp):

The Board has authorized the use of derivative instruments for the purpose of supporting the strategic and operational business activities of the Group and reducing the risk of loss arising from changes in interest rates and exchange rates. All use of derivative instruments within the Group is to hedge risk exposure, and the Group takes no trading positions in derivatives.

For the purpose of reducing interest rate risk and currency risk, the Group uses a number of derivative instruments. These comprise interest rate swaps, interest rate options, forward rate agreements, interest rate and bond futures, currency swaps and forward foreign exchange contracts.

…

The benefits of using off-balance sheet derivative instruments are measured by examining the anticipated consequences of not hedging the perceived risk in terms of revenue or capital loss.

~

So, not only are derivatives a good thing, there are even more benefits to having them off the balance sheet …

[4plexowner]

From a 2004 EdgarOnline report inre Northern Rock
(http://sec.edgar-online.com/2004/06/01/0000905148-04-002681/Section15.asp):

The Board has authorized the use of derivative instruments for the purpose of supporting the strategic and operational business activities of the Group and reducing the risk of loss arising from changes in interest rates and exchange rates. All use of derivative instruments within the Group is to hedge risk exposure, and the Group takes no trading positions in derivatives.

For the purpose of reducing interest rate risk and currency risk, the Group uses a number of derivative instruments. These comprise interest rate swaps, interest rate options, forward rate agreements, interest rate and bond futures, currency swaps and forward foreign exchange contracts.

…

The benefits of using off-balance sheet derivative instruments are measured by examining the anticipated consequences of not hedging the perceived risk in terms of revenue or capital loss.

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So, not only are derivatives a good thing, there are even more benefits to having them off the balance sheet …

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