Sir, The Brown-Darling team have now come to the inevitable conclusion that Northern Rock is to be taken under the Treasury’s wing (reports, Feb 18 and 19). The question, of course, is how this is to be achieved. A Network Rail-style, public financed, non-profit but privately run illusion? Or perhaps an NHS-style, completely state-owned institution but run by target-driven executives through a network of fragmented private companies? Probably some hideous concoction of both.

Northern Rock stood for all the worst aspects of many of the banks and financial institutions — target-driven, filled with money-fuelled greed to be exercised at all costs, with scant regard for responsibility or consequence. The public are easy targets for living above their means and show the same irresponsible behaviour as their predators, but there is always a day of reckoning when the risks are so high. What sort of message does this Government takeover give to both the predators and the prey?

John Walton
Shepperton, Surrey

Sir, The Northern Rock saga is yet another demonstration of the pernicious effect of the bonus-driven culture that has swept through the financial system. In finance high returns are always associated with high risk, and by setting up a remuneration system that rewards staff in proportion to the short-term returns that they bring, the financial sector has created a built-in, automatic long-term risk enhancement mechanism.

It is therefore time for this bonus culture to be reviewed, and given the impact that finance has on the whole economy — which means, as in the Northern Rock case, that government must pick up the pieces when things go wrong — it would be perfectly legitimate for such a review to be carried out by the public authorities.

Adrian Cosker
Head of Economics, The Knights Templar School, Baldock, Herts

Sir, Your excellent Peter Riddell refers to the economic competence (or lack of it) of the Prime Minister and the Chancellor in connection with Northern Rock.

But that is quite the wrong term, and therein lies an important issue. The competence of Brown and Darling might be excellent within the economic field, but what was required by Northern Rock and by the Government was financial competence. I have no economic competence, having been one of Sir Roy Harrod’s dimmest pupils, but I do know that lending long and borrowing short is financial suicide, and that is what the Northern Rock board did, while slaughtering the shareholders.

J. M. L. Stone
London W1

Sir, Carol Sarler cites the gambler who abdicates responsibility for his actions and sues for compensation (Thunderer, Feb 18).

Surely SRM Global and RAB Capital, hedge fund investors in Northern Rock, are no different?

F. Vickers
Woking

Sir, Presumably if a Northern Rock mortgage customer defaults on his borrowing, then rather than repossess the property, it will be cheaper for the Goverment to take ownership and rent the property back to the householder. This will save on both the house sale costs and the costs incurred rehousing the family. Why not call them “council houses”?

Neil Webster
Preston

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