Well I knew about Granite so why did no-one else? I echo the comments from Mr Llewellyn, which have previously been published. This should be investigated by someone, but probably won't be, which unfortunately reflects most people's increasing cynicism about this saga.

NM, Poole, England

If Granite has received no new mortgages to replenish those that have been paid off over the past 5 months there must be a hole in the finely balanced equation that pays bondholders interest.

Credit Crunch? We are only seeing the start of it.

BagginsAtSea, Torquay, UK

As I understand it the charities named in these trusts (often they don't even know they've been named!) only benefit when/if the trust is wound up - then by only left-over 'petty cash. Scandalous

WPW, Birmingham, UK

This is starting to have an Enron-like whiff about it. The big questions are what happened to the money that Granite paid to Northern Rock for passing over new mortgages to be securitised, and how it was accounted for.

There may be some more shocks to come.

Martin, London,

Setting up a charitable trust and then using it for a non charitable purpose sounds like fraud to me. The Northern Rock directors who set up and operated Granite should be bought to book and Granite assets should be given back to Northern Rock.

rob, London,

Ayayay, London.

You are turning up spouting solid facts in a calming voice whilst there is a witchhunt by the foolish, uninformed and over-excitable going on.

Move on please, you are not wanted here...

John, Leeds, UK

The government should review the books of the charitable thrust that owns Granite. Did they indeed donate large sums of money for the stated purpose (Down's)? If so, continue the scheme. If not, we're dealing with a tax scam instigated by Northern Rock, and those in charge ought to be prosecuted and convicted as fraudsters, and their assets impounded and reinvested into the company.

Roel, Brussels, Belgium

Would you buy a used car from this Chancellor ?
And yet I have no choice but to trust this lot with my pension.

robert everitt, wolverhampton,

And now the truth. Did the potential bidders know of this situation? It would be interesting to hear from them. This is tax avoidance to my mind using a charity to qualify.
I would mention that if they were left to fold savers with up to £35,000 would be protected an earlier contributor did not qualify his statement on this point

V Cooper, Yeovil, U.K.

It would be very interesting to know whether Gordon and Alistair have their mortgages with Northern Rock/Granite or indeed how many MP's do??
The government are spending a lot of time and tax payers money on this.
Why did they not do the same for the rest of British industry eg MG/Rover?
Makes you wonder whether there is a hidden agenda.

Mike, S. Wales,

Is there any legislation in place that ensures directtors, exhibiting such gross incompetence are duly prosecuted. probably not and they will continue to lead luxury life styles having made so many suffer due to their greed.

Alan, Cheltenham,

Just bankrupt the lot of them and close all these companies down. I want my taxes back. Now.
The government is a greedy, incompetent, thieving machine sucking the people of Britain dry. Time to man the barrickades I reckon!

Colin Smith, Norwich,

Granite's name appeared earlier in the Northern Rock saga when it was revealed that the supposed beneficaries of its trust status - people with learning disabilities- had never heard of it and had not received the sort of benefits that such a rich fund would imply.

Therefore the whole legality of Granite as a vehicle for Northern Rock must be properly examined before nationalisation -shortchanging charities may be one thing for the capitalists but should be quite another for the government!

Alun Llewelyn, Ystalyfera, Swansea, Wales

Granite seems to be a dodgy scheme to get debt off balance sheet.

Ian Anderson, Knutsford, UK

Did Darling, did Brown, did anybody, in Government,know about this stonewall thing - GRANITE - and if they did why wasn't it brought out in the open much sooner?. £100 thousand million of public ie taxpayer's money is riding on this deal. My firm opinion is that Northern Rock is totally knackered and the British taxpayer stands to be worse off to that amount!

Robert Phillifent, Whitley Bay, Great Britain

The government should have let Northern Rock fold. It would have served the speculators such as hedge funds right if they had lost their money when trying to make a fast buck. Mr Darling should resign with immediate effect as the electorate has lost faith in him

Douglas W. Tott, Bruichladdich, Scotland

The comments on this and other websites demonstrate a lot of misunderstanding on this issue, not helped by excitable MPs and journalists trying to stoke up controversy when none is there. The issue is crying out for an article from someone in the market who can explain how it works (not me).
In short, Northern Rock has a lot of mortgage business but few depositers. It therefore needs to raise cash. To do this it issues bonds. It can borrow at a better rate of interest if it offers security on the bonds (in exactly the same way that you or I can get a better rate if we offer our house as security for a mortgage than if we take out an unsecured loan). The only security NR can offer is its mortgage book. To do this it sells the mortgages to Granite which pays NR for the mortgages. Granite raises the money to pay NR by issuing bonds.
Who owns the bonds? Probably most of the people commenting on this board through their pensions.

Ayayay, London,

Let bad businesses fail and good ones survive. I don't see the Government coming to help me keep my small business afloat. Why don't they come and buy me out? In fact, the reverse, since he is clamping down on any tax breaks that there were which could support me. Its feeling like Labour has moved starkly to the Left.

Michael, London,

Can my council have a teeny weeny bit of the money the government has to throw away to repair the drains in my town (something I pay my council tax for anyway). This will stop me being flooded again when the rains come having only just moved back home.

s badger, chipping campden, uk

There is nothing secret about what's being going on. The documents which relate to Granite and the various securitisations have been available on NR's website for years.
Why is Granite charitable? To avoid an archane legal rule which provides that only charitable trusts can exist for perpetuity. Granite is not expected to make a profit, the assets and liabilities are carefully matched to ensure it never does. It is therefore irrelevant who owns it. But the answer is that it is owned by professional trustees who hold it on behalf of charity. In the unlikely event Granite did make profits then good for the charity. If it doesn't well, so what noone loses out.
What can the Government do about this ? Nothing, the deal's been done, the mortages have already been sold and NR has already received value for them in the form of the proceeds of the bond issue.
Whilst the structure is complex, it is no different from a company mortgaging its head office to raise capital.

Ayayay, London,

Ironic that the tax payer is paying for a company that put its wortthiest products out of the reach of the tax man.

How many times over could we have saved Rover instead? At least we could all have had a car to jolly it along and what fun to all be a part owner of a badge.

Behind the granite faces I'm sure there is laughter at how we have all been taken for mugs. After last nights Dispatches program on chanel 4, Jon Moulton made it quite clear that everyone knew they were heading for disaster, but greed drove them on. He made the government, the treasury and the FSA aware when they could have saved the situation.

The last laugh is the FSA now investigates itself. Why not claw back money to help Northern Rock from the judicial system, just let all criminals investigate themselves.

It's all too good to be a work of fiction.

Robin, Crawley, UK

The bondholders are us, our pension funds, our insurance companies.

Simon, London,

What about their Guernsey operation, how is that run and funded ?

David Inglis, St.Peter Port, Channel Islands

The goverment should just step in and bankrupt them take back our cash and put an end to this frace forget the bank and its investories i want my tax back!

I am sick of thsi country where we have given so much and get so little back the goverment is a farce!

Mr W Jones, Liverpool, England

What a complete mess.

You would have thought that with a nickname like 'Prudence 'Gordon brown would have been slightly more careful that just to pour £50bn of our tax payers money into a failing bank.

The author has of course got his finger right on the point when he said the government was “sensitive about feelings in the North East”, i.e. don’t upset labour constituencies propping up a government which has seen support slipping.

I am glad the EU has shown an interest in this, perhaps we will get some degree of sense to stop this interference for political gain.

Mark Vickery, Sittingbourne, Kent

Wow! These security things seem like a great idea; heads I win tails you lose! Where do I get some?

Paul Padley, Shrivenham, England

And just how much money have they provided to the Downs Syndrome charity ?

ajohnstone , edinburgh, uk

So now the question arises - Why was no due diligence undertaken by the likes of KPMG or Deloitte before any long term binding committment was made to Northern Rock? This is the very least that taxpayers should have expected considering that a potential of our £100 billion of our cash is now on its table.

Now we find that not only are we financing a bank that became insolvent because its reckless mangement embarked on a lousy business plan that was always doomed to failure at some point, we do so without the security which was supposed to be underwriting it. What should have happened is a repeat of a far more effective approach that was used to deal with a similar situation 140 years ago: http://www.figurewizard.com/article.php/Northern_Rock_2007_and_Overend_Gurney_1866

figurewizard, Hampshire, UK

49 billion pounds, that is a lot of schools and hospitals in the UK,

mohsen, malaga, spain

Can you not research this offshore company for names and addresses?? Notable by their absense in your otherwise 'full' report. I think we ought to be told. Don't you? There is a small ongoing public investment here of some 100 billion quid or something equally stupid.

Victor M., Chelmsford, Essex.,

If Granite is nationalised (presumably without compensation) then the bond holders, which are likely to be other banks, will suddenly have lost billions of pounds of assets and future income. Since no one, other than Granite itself, knows who holds these bonds the credit crunch will simply get deeper.
The parachute will eventually open but it's getting very dodgy out there.
I would leave Granite alone, you don't know what's under that stone.

Eddie Reader, birmingham, england

What do Norther Rock's auditors have to say about this?

Gordon , Wetherby, UK

does not the late discovery of the whereabouts of £40bn of assets increase the possibility of fraud somewhere? I remember dicovering that the directors of a Footsie retailer privately owned the supplier- allowing pricing to milk profits.
How can HMG spend £100bn in a night after this degree of investigation?

a.hintonbsc(econ)hons, norfolk, england

I'm glad the Government is finally having its fingers burned by the EU which they sign all our rights away to! If the business plan is deemed illegal where will the Government be then???

James, glasgow,

So now we have the ugly truth. All the billions of pounds that the Bank of England have lent Northern Rock will almost certainly never be repaid, and the taxpayer will have to pick up the bill. This will mean less public spending and higher taxes. Perhaps it would have been wiser to let Northern Rock fold, leaving their savers and shareholders with less. This can only serve to remind us, never to put all your eggs in one basket, whether owning shares or having money in a bank account.

N.Metcalf, LINCOLN,

Who are the controling individuals on Granite's board? How are the profits distributed?

Ian, Frederick, USA/MD

so, who are the bondholders?

stephen, china, china