Brown - The Golden Fool

The Ernst & Young ITEM Club of economists now estimates the UK Fiscal deficit from 1st April at 12.6%, read here. Showing the Treasury still underestimates the gravity of the crisis they alone have created is this further awful figure: Ernst & Young said large deficits will persist well into the next decade, predicting borrowing over the next five fiscal years will amount to 704 billion pounds, 270 billion more than Darling forecast four months ago. Another Bloomberg report on the National Audit Office critique of the Treasury and its handling of Northern Rock, shows 1.8 billion of loans at 125% were made after the Bank hit difficulties, link here: The NAO said Northern Rock issued 1.8 billion pounds of mortgages for up to 125 percent of the value of homes after the lender first sought government backing in September 2007. The loans accounted for 30 percent of the bank’s mortgage lending. Northern Rock’s business plan, approved by ministers in early 2008, assumed a 5 percent drop in house prices between 2008 and 2011. Why were there no resignations yesterday, nor demands for such resignations from opposition parties? Another question on Northern Rock and its highly suspect lending strategies was raised on this blog on 21st April 2008 and elsewhere, namely the commitment to Mortgage Advisers not to investigate the income levels of applicants for loans beneath 85 % of LTV, I quote: ++++++++++++++++ I dug out an old e-mail from Northern Rock from July 2007 with this paragraph of interest. Our Fast Track Guarantee for cases up to 85% LTV we will guarantee not to request verification of your client's income, provided that they meet our criteria upon submitting their application (please refer to the Mortgage Update for full details). Now I wonder why they would guarantee not to check incomes? +++++++++++++++++ Now from the completely ludicrous defence put forward by Lord Mandelson on TV for allowing 125 % loans to continue and as reported by the Guardian here: "Earlier Lord Mandelson, the business secretary, said the bank was allowed to carry on with high-risk lending after it started receiving support from the taxpayer because the government did not want to suggest it was closing for business" it can be assumed that the same guarantee for non-verification of mortgage applicants income may also have continued beyond the point of government support! The Treasury would then also have been complicit in appearing to endorse a policy of deliberately encouraging fraudulent mortgage applications from independent but regulated financial advisers. Looking at the Guardian link above it should also today be asked why Gordon Brown has not been asked to reply on the specific areas of concern regarding Northern Rock going back to 2004. Time for a Spring Clean? (See the post below).