in a city of no rules they forgot the rules of the street trust no one with your money.people power has brought a chill to politcians but a security net to the money blenders of the city.

michael joseph heavey, cahersiveen>adams towns, madness

Spot on Libby! I almost took pity on little old NR until I saw Applegarth's cheesy photo on their website and quickly realised that if anyone would be looking after number one it would be the CEOs and directors of these financial institutions. I feel more than justified in doing the same.

James, Wimbledon, UK

Oh dear Lord. Have you all thought about this? Really? Seriously? You've sat down and considered all the facts, and genuinely believe a headless panic rush is the most astute way to deal with the situation? I hope that's not true, for your sakes.
A bank facing a temporary liquidity crisis, while a serious issue, is not anything critical. Northern Rock was and remains a perfectly viable business. There is no suggestion that it would run out of money, it had merely approached the BoE to gain liquidity relief from the fallout of the American subprime market.
The reason this is UK-specific is that both the American and European central banks flooded their markets with liquidity - in effect, giving ALL their banks the sort of liquity relief that the BoE gave just one institution. And do you see hoards of Americans/Europeans queuing outside their banks? No.

If I told you that Tesco only stocks enough food for 2 weeks, would you rush there to panic buy... Oh, you've gone already.

John Tee-Rhodes, Manchester,

Who of us hasn’t seen the pictures of city traders behind their computer terminals bulk-selling like mad things at the veriest whiff of rumour? Yet when a financial organisation has to go begging cap-in-hand for emergency funds and we reassign our life savings to a more secure steward we’re accused of pig-ignorance. Perhaps, while they’re deriding our naiveté the financial gurus might find a moment to explain something else: we’re told the root cause of the credit crunch was too-cheap money; to correct this crisis they advocate lowering the interest rates (or, in America’s case, they instantly slash them by 0.5%) – so the wise solution seems to be quick, let’s make money cheaper. I give up.

Taylorfrance, Antonne, France

To a non-British person such as I, this entire episode involving Northern Rock and its customers/savers seems like something out of the movies. Specifically, the run by customers on the Fidelity Fiduciary Bank shown in "Mary Poppins" comes to mind. I had assumed until now that such a run by customers on a UK bank was only confined to "reel life", and could never happen in real life.

Northern Rock's savers cannot be blamed for their suspicions and actions. After all, they have put away money saved from earnings after paying income tax. The interest paid on those savings is also taxed. To add the final insult, not all their savings are "protected". Under such punitive and risky circumstances, there appears to be little incentive for a common person in the UK to save money with banks. So, they are perfectly justified in taking their money elsewhere, or not saving any money at all, if a bank is unable to manage their savings in a responsible manner.

John E. F. O'Reigner, Wirral, England

Northern Rock's 'speculative' business model has come unstuck because of a breakdown in trust between financial institutions. Inter-bank lending has ground to a halt - due to unkown exposure to dodgy debts. Banks don't trust each other, yet expect their customers to trust them? And sniff haughtily at the sign of 'panic'. Their 'panic' at refusing inter-bank lending to Northern Rock is 'rational' but the 'panic' of the public is not? The public have lost trust in the probity and respectibility of the British Banking System. The 'higher-paid help' at the Bank of England should reflect on that fact, and feel somewhat queasy....

AndyM, Malvern , England

Re the Equitable Life disaster and the soothing spin of politicians: It's worth pointing out that Equitable pensions were very popular with MPs. When it crashed the MPs voted themselves suitable compensation while the rest of we Equitable policy holders were left to swing in the breeze.
A large dose of cynicism/scepticism re the utterings of the political class is well justified!

paul n, sheffield, uk

'Other banks, including Barclays, have called on the Bank of England for overnight funding in recent weeks'
In my eyes, this is more of a talking point than the situation at NR - it means the banks were out of cash assets to cover their fat cat asses...
The run on NR was caused by the British media - on a slow southern news day - picking up a minor event in finacial markets and blowing it out of all proportions.
NR asked and were given a line of credit from the BoE. They to date have NOT USED this line of credit. Barclays on the other hand had to seek an EMERGENCY LOAN to cover its financial position!
Is it not prudent of management to see a possible problem occurring in the Interbank Lending system and to put something in place, just incase it happens?
My boiler might break down so I should arrange for repair cover..
The management of NR have not taken the ostrich route out of a possible problem but looked to have a solution in place should there be a future problem

Jim, Glasgow, UK

Absolutely right. I applaud that someone has stood up and said the obvious, though I am suprised that there have not been 1000 messages supporting this article.

I'd go further. This incident could be a catalyst to sorting out the regulation of the finance industry once and for all. Let each and every one of us remember that all the monies invested in our pension funds serve only to bankroll pension industry employees and city scoundrels. When they gamble and win with our money they pay themselves huge bonuses; when they loose we are left to pick up the pieces. So why is anyone suprised then that the public is reluctant to invest in pensions? If the Government wants us to save for retirement, it needs to sort these leeches out and ensure that the returns on investment are fairly distributed.

Perhaps the Government lacks the willingness to sort the problem? For maybe it bites the hand that feeds it?

Media - please stop celebrating Nicola Horlick - she's spending MY money.

Andew, Maidenhead, UK

So what? If an efficient and profitable company like Northern Rock were allowed to fail, then there would be a domino effect until everyone ended up keeping their money under the mattress. How would deserving young people get a mortgage if banks and building societies have no deposits to lend?

This debacle shows what can happen when everyone looks after just their own self interest. What thought were the queuers giving to people who aspire to buying their own home?

A Clarke, London,

Libby, your right. Members of occupational pensions in the private sector were told in official Government documents that our pensions were safe, secure and protected in law. But of course they weren't.125000 decent hard working people have been robbed as a result. The Government was found guilty of maladminstration because of it but still chooses to ignore the PO's recomendations of compensation. So what faith should Northern Rock people put in Messr's Brown and Darling's so called guarentees? Take a tip from someone who believed them, get your money out now before it's too late.

john hayter, herne bay, kent

Nice 'definite' pronouncement by Darling (strings pulled courtesy of grasping Gordon) - read it again!.

"should it be necessary" - we decide that!

"during the current instability" - we decide how long that lasts!

"all existing deposits" - never mind accumulated interest or anyone stupid enough to put more money in!

The public are (as usual) acting wisely. No-one should trust this corrupt government - remember who brought you "we promise a referendum on the Euro Treaty"

Mike Bibbt, St Albans, England -not EU

How wise are people with money? Is it wise to be filmed on TV at you local branch telling everyone you’re a pensioner and are taking all your money out! It appears they think the guarantee given by the government is more risky than their strategy! Lets hope that they don’t keep their money at home because opportunistic criminals wouldn’t need much to land themselves a windfall. The criminal may take up the Northern Rock savers account that’s backed by the government. Its just like NS&I account with better interest. Maybe the victims can sue the media for filming them or maybe blame themselves for given statements on TV, as one women did that she had £750,000 in the bank!
This is not all about trust in the banking system; it also highlights again the reason not to air poor news coverage that fuels more panic and puts its very subjects at risk!
People think cash has value if all banks collapse, if your that worried dont keep it under the matress, buy tinned food ready to barter

H Singh, Birmingham,

Let's keep to reality here - Northern Rock had a liquidity problem caused by banks hoarding cash that they would normally lend to each other in case they were caught short by exposure to the US sub-prime situation. Inter-bank lending is central to liquid markets and it has spasmed. Northern Rock's business is generally sound, with both depositors and borrowers generating good income.

However, media scaremongering such as the article above has caused depositors to panic, withdrawing their savings and further deepening the bank's liquidity problem by removing that source of cash too. What could have been a mere (albeit unwelcome) blip has been exacerbated by the media into a self-fulfilling prophecy of crisis and calamity.

If we're throwing blame around here please; step up and take your share of the responsibility.

fergus, london, uk

Well said: the people withdrawing their money have no faith in the future of Northern Rock and are unhappy with the service provided by the bank as caretaker of their deposits. That's all there is to it. If a customer is dissatisfied, he has the right to withdraw his custom. If that means NR goes to the wall, then so be it. The bank does not have a sound business model so it deserves to drop to junk stock status and then be bought out once its assets / liabilities are clear.

Instead we have a government bailout for a corrupt institution. No wonder the savers are removing their deposits. It was summed up perfectly by a Scottish man in the queues:
"I'm not panicking: I'm making a rational decision to take my money elsehwere". And rightly so.

MB, Edinburgh,

I usually agree with Libby, but not this week I'm afraid. What do journalists love to do because it's so easy? Why, stick up for the man in the street against those who are, well, indoors presumably - "stuffed suits," Libby calls them. So, if you happen to wear a suit these days, you're beyond the pale? I think it's largely the constant insistence by the media that anyone in any kind of authority - manager, minister, financial specialist - is up to no good and not to be trusted, that has got us into this position. If the man in the street (of whom I guess I'm one) is the only one who's right, why bother to strive to better yourself by, say, getting promoted to manager or standing for election?

Barry, Wallington, UK

The panickers may not be stupid but they are utterly selfish. In Reading on Saturday the panickers completely blocked the pavements forcing parents with puschairs into the street where they with other pedestrians had to dodge traffic.

Tony W, Reading, Berks

Sensationalistic article, that stirs up emotive responses from the public. Maginifying percevied risks and the holes in the FSCS to show that NR is longer a reputable instituition. There is no reason to panick. The Anglo-Dutch financial liberals have ganged up on NR to show that they can bring down a bank. Selling NR shares short, creating hysteria and panick by using the Media to manipulate the fickle UK public. The NR CEO and Chancellor were unconvincingly weak in their confidence building statements. Darling should consider his positios. NR only requested a Stand-by Facility from the BoE - a facility that many banks have. They did not draw upon this facility and have sufficient Regulatory Capital with BoE to be solvent. So NO, NO, NO - NR is not bankrupt, nor will it fail, but the irresponsible actions of this author and others in the media have fuelled the crumbling of NR and it's 6000 employees can look forward to a bleak winter.

Gman, Amsterdam, Netherlands

Mr Livesey, we would be bailed out by the tax if Brown hadn't squandered it all on ridiculously badly managed and blank chequed schemes that continue to drain the public purse. The 'prudence' that he has shown has left the country with no money in its' back pocket because he sold our gold reserves at rock bottom prices (instead of selling it quietly in stages he announced the flood to the world and hence gold price went down to 1/3 of what it was, and is today, and that's where we were sold out). The government is useless with money in general and I agree with Ms Purves - why should we trust what they say now! We've all seen this credit crunch coming for years and the fact that commercial banks have planned badly for it is indicative of the belief that they will be bailed out. Now they are being, will it help at all? Bad management rewarded, then bailed out without the threat of severe penalty as would normally happen, then rewarded again. Ridiculous!

Alistair Kipling, Birmingham,

Yes, but do we really want the choice if which banks do and don't survive in this country to be determined by the combination of blind chance and journalists?

At the start of this, it was presumably the toss of a mental coin between NR being run by stupid, greedy über-capitalists, and NR being the Freddie Laker of banks, grabbing an increasing share of the market by offering people the chance to own their own home, who might otherwise not get it. Both stories are as true as each other, both would sell as many newspapers. But only one risks trashing the entire economy.

The man on Channel 4 yesterday who knew his money was safe, knew NR had a piece of paper guaranteeing sufficient credit, but was anyway moving it to another bank which didn't have that piece of paper and which he had presumably researched no more than he researched NR in the first place - he was in the same mental state as victims of "social engineering" crime. That state is dangerous and should not be admired.

Ian Kemmish, Biggleswade, UK

Do not worry!. It is all part of G. Brown's long termism.

In the long term the ordinary British folk will have:
A pound so overvalued that British goods and services will not be able to be sold abroad.
A divided country: the super rich and the poor.
An overtaxed citizenry (already achieved Gordon, Well Done!)
An Education System and Health Service which are the laughing stock of rest of the World.
A Banking and Financial System which is ONLY for the rich, look at the Endowment Mortgage farce and compare it with Hedge Funding and today's Rock calamity.
A hamstrung Police Service that cannot answer an emergency call as they are all too busy filling in their incident reports from last year, with crime and social unresponsibility rampant.

No, Darling should go back to Black Adder or from wherever he came and Brown should retire before he can do any more damage.
All the above items are far too important to be left to the whims of current politicians of whatever ilk.

david parkin, Dili, East timor

When you put your money in a saving account with a bank you are lending that bank your money.

Northern Rock's problem is that it can't borrow money from other banks, so we have a situation where international financiers will not lend money to Northern Rock because they are not convinced of its viability and are unsure that it is still solvent.

At the same time these stripey pants bankers and high flying City whizz kids are snootily telling poor Joe Bloggs on the street that he shouldn't "panic" and should continue lending his hard earned cash to a bank that they themselves won't touch with a barge pole.

There's something wrong with this picture.

As regards the other 'banks', B&B and Abbey etc, (remember when they were called 'building societies'?), I believe in the old adage; if you're going to panic, panic early.

Michael Hills, Singapore,

Nice rant, but financially illiterate. Where does Libby think the money to pay interest or bonuses comes from if not from risk? The endowment mortgage holders in particular were culpable fools if they did not see this, and deserved not a penny in compensation, which was of course at the expense of the truly prudent who took responsibility for themselves and didn't follow that fashion even at its height.

What I don't get though is why Northern Rock needed a line of credit. If its market credit dried up, surely all it had to do was stop writing new mortgages? The existing ones would still be paid, so its relatively small number of savers would be easily funded.

As far as I can see, the BoE's loan could only be intended to underwrite Northern Rock's plan for growth, enabling it to continue to write new business in some vague hope that market conditions might return to what they were. I think the Bank of England has some explaining to do.

G Adamson, LONDON, UK

Libby,

Good article, and accurate.

Most financial advisors here in the States recommend keeping a small percentage (15-25%) of one's investments in foreign stocks. That's on the theory that Japan, UK, German,... markets will not be in sync with the US market. Imagine my surprise when what should be a strictly US event (the sub-prime lender fiasco for US homeowners) all of a sudden is showing up in Japan, UK, Germany,...

Well, it turns out that the large US banks & financial institutions were bundling these dubiously-valued mortgages, and selling them to Japanese banks, UK banks, Zimbabwe. No, no, scratch the last one - even Bob Mugabe is smarter than that. Nobody actually seemed to be placing a value on them. Moody's & S&P rating services in the US were supposed to be the organizations that placed some value on these collateralized mortgages. Oops.

It will be interesting to see if all of the well-rewarded CEOs in 2007 will have their pay docked in 2008.

Don Carrera, Irwin, PA, USA

A few years ago some banks on sold foreign currency loans to some of our farmers. Subsequently A few farmers went broke. and took the banks to court. The courts found the banks to be negligent in advice and process.. The Court reasoning stemmed from the notion that Farmers were in principle Farmers and not financiers and that the banks had breached the requirements of a duty of care. The banks had to repay the severe interest losses. I believe the finding also made mention of the fact that many banks sell derivative financial products only and have no service and smiles for the ordinary saver. The word usury is not an appropriate word for some of the self promoting financial institutions, but we aught to invent a new one which describes consequences cavalier banking practices obscured in the fine print associated with the loss of savings and pensions

robert williamson, muston, australia

Agreed Libby. I wouldn't trust any of them if they told me the sky was blue. And their total inablility to answer one straight question with a straight answer on the Today Programme was quite sickening. I very much hope that chief executive, Appleyard isn't it? will be sacked. I suspect if he goes, however, he will go with a fat golden goodbye, while his staff that are made redundant after the inevitable takevover will doubtless leave with statutory redundancy pay. What a mean and unpleasant little country this is.

David Moncur, Dundee, Scotland

"Libby Purves , Northern Rock is renowned for its corporate benevolence. In 2006 it was the second-largest charitable giver in the FTSE 100"

Yeah, and a donor of nearly £1/2 million pounds to one of Labour's favourite Thiknk Tanks, the IPPR. More to the point.

Jeremy Poynton, Fromeville, 51st State

Libby Purves , Northern Rock is renowned for its corporate benevolence. In 2006 it was the second-largest charitable giver in the FTSE 100. Despite that, the article states:

“Those who run these companies (16 per cent pay rises at the top of Northern Rock this year) have not the slightest compunction in looking out for Number One.”

However, another article [‘Geordies are aghast as the city’s biggest player runs into trouble’] in yesterday’s edition of the Times contains a direct contradiction of the implication that Northern Rock is a greedy corporation run by directors who are only only interested in self-enrichment:

“Northern Rock’s corporate philosophy has been to use its riches generously. When it became a bank it set up the Northern Rock Foundation, where 5 per cent of the company’s pretax profits are set aside for good works. In 2006 it was the second-largest charitable giver in the FTSE 100.
To be continued...

Ron, New York, USA

The bank...has burrowed into the Geordie psyche, sponsoring not only the Magpies but also the Newcastle Falcons rugby club, the Newcastle Eagles basketball, Durham Cricket Club, the professional golfer Paul Eales and the cycling festival Northern Rock Cyclone. Mr Ramsbotham [chief executive of the North East Chamber of Commerce] said that any company that employed so many people would be important to the economy of the North East. But its corporate character at the heart of the community had given it a talismanic place in the Geordie universe.

He said: “Everything Northern Rock has done since it became a bank has been exemplary, especially in the arena of social responsibility. It has been absolutely fundamental what the foundation has achieved over the years,whether it is bringing the tall ships here or helping the homeless. Football at Newcastle, cricket at Durham, every single sporting activity receives support from them.

To be continued

Ron, New York, USA

All together now: "Lessons will be learnt...."

David Masu, Zürich,

Quite right!!

I will move my own funds around as and when I please... yes maybe even to Switzerland or the Caymans.... and there is not a damn thing you can do about it, except make me stand in a queue for hours.

It is presumptious to tell me what to do with my OWN money, it is frankly NONE OF YOUR BUSINESS. I did not hear you say anything when I made my deposits.

If it appears to impact you personally in any way then I suggest that instead of braying you take some action as I have chosen to do. If not that is your lookout.

H Paulson, Bath,

exploitation,yes for decade banks have exploited customers trust to there advantage, the city has ducked the little responsibility it had to pensioners, labour insulted the citeziens of britain with lies and spin, black monday was pay back by the british people,now we reputations in tatters and the banking world"s £40 letter a stitch too far.Trust you cant buy one has to earn it.

michael joseph heavey, cahersiveen>adams towns, madness

I agree fully with Ms Purves. Why should we take chances with our money, having watched, and in many cases suffered, in previous financial catastrophes? I read an arrogant letter yesterday on a website, from a shareholder scolding savers who withdrew their cash for 'costing him money'. Excuse me? We should risk our savings for your share price? I think not. It is a pity the Government had not made the statement underwriting the savings last week; this would have reassured everyone, and saved us all, savers and shareholders, much concern.

Bryan Bailie, Newtownards, Northern Ireland

This line:

"We have grown wearily cynical about the smooth blandishments of the man from the National Equitable Profitable & Hardly At All Dodgy Assurance Company, and the “independent” advisers who take his commission."

is insulting! As a hardworking, honest, Independent Financial Adviser I suggest the author considers the damage she, and many like her. do each time they decide to have a go at my profession.

Richard Barningham, Cardiff, UK

I don't think i've believed a word any government has said since i stopped believing in the tooth fairy. As for press releases (hahahaha please stop my sides are splitting)...
Every private company is out to stitch up its customers and every regulator doesnt give a damn becuase they have nothing personally at stake. Governments just want to stay in power so they will say anything and lie until the cows come home not to rock the boat....and they will also use our taxes to prop up a private bank that its shareholders should be bailing out.

phil, london, uk

I couldn't agree more with Libby over this. Trust is earned, not preached into being. To institutions like banks I am no more than a statistic. I'd rather be one statistic (withdrawer of cash) than another (sucker who left it there and lost it). Cynicism and disbelief are earned, too.

Maggie Bolton, Godalming, UK

You are absolutely right. The Government wants us to save for our old age. Let's say that by the time we retire we've managed to save £200,000. Are we really expected to open 100 separate savings accounts to keep ourselves safe?

Every single reassuring sentence written by government spokesmen, industry experts, and journalists over the weekend had the word "probably" in it.

Can you eat "probably"? Can you live in "probably"? Probably not.

Joseph Bruno, London,

What is quite funny is that all this movement of money is great for all the other financial institutions, as it means that their liquidity has shot upwards by whatever share of people have reinvested their money in them.

Nathan, Penang, Malaysia

If they had said every person for themselves would you have been happier? Pretty cheap dig in my opinion. Damn the politicians no matter what they do or say or damn them if they don't do or say it.

Brian Golden, Dublin,

Michael from Sheffield has it right- this government doesn't have the credibility to offer a reassuring guarantee.

If I was a Nothern Rock customer, the prospect of this government ending up with control of my life savings would have me queueing up as well.

George Walsh, Wilmgington Spa, UK

The problem here is whether or not the panic will spread to other banks. If it does then banks and building societies will start suffering and may collapse altogether. This would have a catastrophic effect on the economy, sending it into recession, as banks are a key pillar of the economy, keeping the money in circulation (admittedly this is the worst case scenario, but its what caused the Great Depression…).

This is potentially bigger than a few people’s savings, and the real threat is a mass panic by millions of ordinary people that could potentially cause a catastrophe if left unchecked. This is why the Government is trying to convince people not to panic.

dan, Newcastle,

If nothing else has come out of this, one thing that has is a reminder to the industry and government alike that they are there only by the will of the people. I hope they have learned this lesson and remember who really keeps this country going.

Phil Mitchell, Warrington, UK

The same lemming-like response that has resulted in queues of people stripping bags of sugar from supermarket shelves and waiting in hour-long queues to fill up with less than half a gallon of petrol! Pathetic and totally predictable!

JamesP, Alderley Edge, Cheshire, UK

We are still suffering from the Blair/Campbell spin years, of which the present government were all bit players. Wnem Alistair Darling appeared on our screens, albeit late in the day and told all was well, we did not believe him. When his deputy appeared on the BBC's PM programme and refused to answer one question, then we knew we we were right. The public may appear to be stupid until roused, then they start marching with their feet, Northern Rock today, the ballot boxes tomorrow.
Northern Rock's problems became our problem because it over-borrowed at the wrong rate. If nothing else, it will dent the nation's confidence, ,and unless personal debt, underwritten by the current price of our houses, is voluntarily reeled in, your once friendly money lender is more than likely to do it for you. Only then will we discover whether the Alistair Darling "rock solid, or built on sand" economy will come crashing down all around us?

M. Fishman, London,

Libby Purves, You have got it absolutely right. You have eloquently described exactly what I've been thinking.
Thank you.

Richard Hewitt, Hexham, Northumberland

I lost alot of money in the Equitible Life fiasco. I listened to the government and the EL press releases and a fat lot of good it did me.

I don't blame the NR account holders withdrawing ther money. If there's ever any probs with my bank I'll be first in the line.

neal, wokingham, england

Well said Libby, it is all down to trust or in this case,the lack of it. We have all heard the patronising twaddle churned out by the bankers and politicians a hundred times before Unfortunately the only people who end up with egg on their faces are us, the ordinary people with pension plans, low interest savings, endowment policies etc. etc. etc. I saw Michael Foot on channel 4 news last night and a most unpleasant experience it was to. If his attitude is characteristic of what goes on in the upper echelons of banking then it is hardly suprising that noone trusts these people or the banks/financial institutions they work for.

It is the same lack of trust and disbelief of those in power that stops people voting.

Simon, Newcastle upon Tyne, UK

Murph, Ian - I'm quite sure the US government backed savings up to $100k as recently as 2003, when I moved from the US to the UK. All the banks I've ever been in in the US had a little notice on the door saying 'all deposits federally insured to $100,000' or similar. If anything, it's probably gone up since then. So yes, savers in the US definitely have it better than in the UK - at least in that sense.

Margaret, Durham, England

Blackpool sweetstalls are now selling a new line: (Northern) Rock, It has ;BUST' written all the way through it. Perhaps Mr. Darling could suck it and see.

Rassendyll, Cambrdige, UK

Usually I enjoy Libby Purves' column but I'm not sure she understands what actually went on here.

The run on Northern Rock was nothing more than herd instinct. Libby may equally applaud a group of lemmings rushing over a cliff face to their deaths.

Gerard, London, UK

I can understand why some people panicked, and yes naivety had much to do with it. But that there are still people lining up to withdraw their savings this morning goes even beyond naivety. How much have all these people lost in penalty charges for withdrawing savings early?

Jacqui Martin, Azores, Portugal

Once again we see the banking industry for what it is, a bunch of chancers who will gleefully enjoy the good times but want tax payers money to help them out when it turns sour.

Jon , whinnieliggate ,

Congratulatons to the serious press for getting it right. Regardless of lurid tabloid headlines, the message needs to get over that politicians and big business are in bed together in order to stitch up the ordinary taxpayers of this country.
The message is "Don't trust anyone that has his hand out for your money (or dips into your wallet via the tax bill)".

KR, Stockport,

Well stated, can we believe a government who have reneged on their promises to reimburse lorry drivers trapped in France, farmers compensation payments, etc. They are presiding over a soul destroying tax credit mess for millions of people without a care. Indeed they have cut the civil service by at least 30,000 recently and are currently reducing the numbers even further, so the situation will only get worse. Can you start to imagine the amount of red tape and form filling you’ll have to endure to retrieve your own money should any bank fold. Inevitably this would take a long time, and assumingly you’d would loose out on any interest accrued at the very least. Its near impossible to get an answer to a question from any government dept now, so I dread to think what it would be like should the bank fold and this government be in charge of your saving.

History tells you to be safe, rather that being brave and sorry. By the way where is PM Brown, not a word, nothing changes with this man always elusive, when the going gets tough.

Michael, Sheffield,

Ian...are you sure its 100K...and not 10K? I may be thinking of way back when but the latter figure sticks out for some reason. Perhaps its been adjusted to reflect the times. But besides that....its gotta be a scary situation for Brits! I feel for these people and their uncertainty. I mean imagine a trust gone bad in an institution where its failure could ruin an individual who did nothing more than deposit his money in what he thought was a safe venue for a scant return in interest if any at all. Its scary stuff!! Lets hope it doesn't spread!

Murph, Madisonville, USA/KY

Naive we may be. But it doesn't take much sophistication to smell a rat.

eric campbell, harrogate, uk

So what? So if you help to create a financial crisis, it will be your tax money that will pay to sort it out.

Didn't you think of that?

jon livesey, Sunnyvale, CA/US

There has been no mention of Northern Rock's shareholders. Why didnt they bail it out with a rights issue. The government has set an extraordinary precedent and has demonstrated again that career politician's with no experience of business or commerce are useless managers.

Gwyn Davies, Cardiff,

Let's not be too smug about this, Building Societies have always borrowed short and loaned long, its the nature of the business. The Northern Rock got it wrong by borrowing from the wrong people. It should be hung out to dry and sod the shareholders and to a lesser extent the lenders. Lending money isn't a one way bet, why did the "depositors" think they were getting a better than average rate of interest? Some of it was risk premium.
However these are sad times for people like me, brought up on Tyneside in a house bought with a Rock mortgage. Even as recently as the 1960's a mortgage was almost a moral commitment. The borrower, aware that the savings of local people - neighbours, had enabled his purchase had a sense of gratitiude. Now who cares if your loan comes from some anonymous block of money released by some no-name bank, collected by some computer system badged up to look like something you've seen on the tele? And all managed by the profession of greed.

CliveS, East Sussex,

The run on Northern Rock shows why the US effectively guarantees 100 percent of deposits (deposits are guaranteed one hundred percent up to $100,000 per account but people can split their accounts between institutions) in the UK, as you point out, the depositor immediately takes a hit so there is always an incentive to withdraw deposits. The theoretical justification for the UK's approach is that it encourages depositors to assess the safety of their deposits, the reality is that it simply favours the large banks that are, rightly, seen as too large to be allowed to fail.

Ian, Frederick, USA MD

Nearly full marks but you cast some of us small shareholders who are also cash savers in the spiv role when we are spreading our investments in what obviously you thought was a sound British company. Interest only crumbs leaving a lions share for the directors, city speculators etc.
This mess could have been prevented for savers and steady eddy shareholders like myself if we had honest and effective regulators and politicians,stop laughing, controlling the less than honest city folk.
There is something a little wrong with the lead up to this situation in the sense that the fix was in, I have the feeling that the small guys have been set up.

Martin Crowther, Manchester, England

Well said, Ms Purves.
Channel4 News interviewed old BoE & FSA man, Michael Foot.
He told us we were being naive.
Patronising cheek!

Robert Williams, Halifax, England

Bravo! Brilliant! The first non-condescending article in the national press. Indeed people aren't stupid, they realise that the government's assurance was meant to lull them into a false sense of complacency, while all the big investors and banks pulled their money out to Northern Rock. I reckon that this last-gasp announcement by Alistair Darling will not stop this banking run - indeed it might exacerbate it by causing runs on A&L or B&B when all their depositors realise that the govt is now tapped out by this rescue of northern rock and that if A&L or B&B were to get into trouble, there will be no similar help offered to them. Big banks that gamble with small savers money deserve all the grief that they are getting!

IrishEyes, Belfast,