Northern Rock : Signs Of The Global Crisis

2412 Words10 Pages
Northern Rock: Signs of the Global Crisis in the UK The United Kingdom experienced early effects of the global financial crisis that burdened nearly every developed country in the world. The most commonly agreed causal mechanism for the burgeoning of this global credit crunch was in the subprime mortgage securities originating in the United States and spreading to other nations. Northern Rock, a bank in the United Kingdom, was one of the institutions negatively impacted early on during the global crisis (MacDonald & Mollenkamp, 2008; Shin, 2009). Although its failure was among the first signs of the global crisis in the United Kingdom, regulatory barriers were not in place early enough to stymie the resulting financial turmoil, and financial reform resulted (Enrich & Norman, 2010). The purpose of this essay is to outline the particulars of the Northern Rock debacle and then to review the reform of the Financial Services Authority, the main financial oversight entity in the United Kingdom during the period of the crisis. Background Northern Rock Northern Rock’s history began in the middle of the 19th century with two separate mutually owned savings and mortgage banks. These banks merged in the mid 1960’s to form Northern Rock (Shin, 2009). Over the succeeding 30 years, Northern Rock acquired dozens of smaller mutually owned savings and mortgage banks (“Northern Rock,” 2016) prior to going public. After enjoying growth over all these years as a mutually owned savings and
Get Access