Northern Rock - Legal Challenge

Would they have to? Could the bank simply be wound down. Close down the branches, continue collecting interest on loans over the next 30 years, return the money to existing customers as and when they request it, and not set up any new accounts. Eventually the bank would simply cease to exist.

That plagiarism adds nothing to this discussion.

It is so. Nothing "possibly" about it.

So you agree your shares had lost all their value?

What are you talking about? The only people who have confiscated anything from you are the NR directors whom you (with other shareholders) voted to run your company.

What compensation are the directors giving you?

More to the point, look at what compensation they'll each get for their gross incompetence.

Out of interest, why did you buy NR shares? What did you spend? What were they worth just before they crashed? Why didn't you cash them in earlier?

The government already owns a bank. If they wanted to wind up Northern Rock in such a manner they could transfer the accounts to National Savings and Investments to administer.

It is not a confiscation by the state. You are an advocate of the free market - the value of the shares today represents the value of the company on the free market. Therefore the owners of shares should be paid that market value.

Please answer the question - why did SRM buy the shares?

If you don't like this - what is your preferred alternative.

The share value was at its current level due to

a) speculation it would be taken over by a private company for more money than the shares were worth.

b) Government underwriting the debts

Without this the real share price is bugger all

In message , Gaz writes

There is only one question in all this for me. Does the taxpayer get every penny back? Unless and until that loan has all been repaid, shareholders are entitled to nothing.

Failure to bail them out quickly enough might be to blame, but shareholders have no legal right to have their company bailed out at all.

No. It represents the value of the company on a market where the government provides half their funding, something the private sector was unwilling to do.

If the Bank of England had said today "We want our money back, now", as they are perfectly entitled to do, what would happen?

The company would be bankrupt.

Its not plagiarism, notice the quotation marks???

Well, i am sorry but you are unable to say that. If in october the bank was put into administration and the assets sold off, and its liabilities cleared, what was left would go proportionally to the share holders. The bank had an intrinsic value, post settling its assets and liabilities.

The shares might have lost all value, that would assume the company itself was worthless.

The government have taken over the bank. They now own it. They have confiscated private goods. They need to compensate (generously) those whose goods where confiscated.

I dont know, i dont have any NR shares, nor did i imply i did.

Entirely irrelevant. Keep to the point.

I havent got NR shares.

What did you spend?

The value of shares go and up and down, all shareholders accept that risk. No one in their right mind would expect the Government to compensate shareholders at the pre crash level, the Government had little to do with the crash of the company. At some point though, the Government having taken control is responsible for compensating those whose private property has been confiscated. The level of compensation i am sure will be decided in a Court.

This country has long held to the principle that the State cannot confiscate the private property of an individual without compensation.

Gaz

Yes, but by giving it the credit line in the first place, an argument could be placed that they have engineered its collapse, like Railtracks collapse was most certainly and specifically engineered by the Government, however the latter out of spite, and the former out of incompetence.

Gaz

A few things;

The shareholders are probably taxpayers too.

Judith makes shareholders(holdings) sound like criminals(criminal offence): all they have done "wrong" is bought shares. There must be many shareholders who own a modest amount of shares as savings. They are hardly a large evil corporation. What about pension fund investments that may include NR shares. Can they "f*ck off" as well? Seems to me quite reasonable that shareholders might like to see if their investments can be protected from this legalized theft - which is what the government are actually intending to implement.

To be slightly political, V. Cable seems to hate the thought of shareholders too. Maybe the whole stock market should be shut down if they are all such a bad lot.

The government even has to bring in a law to allow them to do what they want (steal the shareholders shares) - or put another way, MAKE the shareholders part with their shares for virtually nothing. The bank could have failed of course - so maybe in that case Branson would have been a better bet. Ok he couldn't guarantee jobs - but neither can Nationalization.

I wonder if the shareholders can use the Human Rights legislation, on the grounds that the state is changing the law which will deprive them of their property? Now that would be fun to watch.

Still waiting for your answer as to why you think SRM Global and RAB Capital bought shares last October?

You can do it - don't be shy: a) To "save" the company - no expense spared b) They are a philanthropic organisation. c) To save the jobs of Northern Rock. d) To help out the small investor e) To support the Labour Government

The phrase "f*ck off" still springs to mind.

Oh - and you still haven't said what your preferred option as a solution to the NR problem would be - if you haven't got one, just say so.

I did answer, i answered that it does not matter how they got it. If you recieved a new car as a result of a bingo win, or as a result of working very hard and saving up, it doesnt matter if the State comes along and confiscates it.

It does not matter, they speculated I guess. I am not advocating people have their risk insulated against, whats important is that at the point of confiscation a fair price is paid to the property owners.

Well, i am sorry, but if you think that it is fine for the government to confiscate property without compensation to such people, you support them doing it to you.

Let it go into administration and sell off its parts. It was my solution at the beginning and it is the solution now.

Gaz

Well I disagree - they bought the shares in order to speculate and to make money out if it - and they took a gamble. If they were going to make money out of this unfortunate state of affairs then someone else was going to lose.

They gambled - they lost - and as far as I am concerned they can f*ck off.

(PS You're not a member of the Tory party by any chance are you? - you seem to espouse the big business must be supported at all times even if that means shafting the public and society)

Fair enough - but not that far off.

Oh god, it is like banging my head against a brick wall.

You seem a complete idiot. It isnt about big business. Are you saying we should compensate old grannies who got the shares post demutualisation, but not the institutional shareholders??? You either compensate all or none. Should we compensate the small share holders for having their property confiscated?

Gaz

I have not said that anyone should be "compensated". All share-holders chose to invest their money in Northern Rock; as far as I know no-one was forced to do so. Their's was a commercial decision. The value of shares can go down as well as up. The value of the shares has gone down. No-one, but no-one deserves "compensation" (which I think is in fact an inappropriate term).

People chose to invest - some were more money grabbing than most and only "invested" when they thought they saw a quick killing was to be made.

SRM Global and RAB Capital bought shares last October? - why did they do that?

A quick killing is not to be made, and so they can now f*ck off.

Is that clear enough for you?

That's all fair enough as far as it goes. Investors gamble and hope the value goes up, and if it goes down, tough. They voluntarily expose themselves to market risk, and no-one is suggesting that anyone should be compensated for the value of the shares going down from a high value to a low value.

But what has happened is that the shares have been *taken away* from their rightful owners -- that's what nationalisation (or "taking into public ownership") means -- while they still had some (low) value. It's only for this taking away that compensation is required.

Do you have a problem with that? If so, why?

Investors voluntarily expose themselves to *market risk*, but not to the risk of having their investment deliberately *taken* (one might say stolen) from them. Do you see the difference? Don't you think the ex-shareholders deserve the compulsory acquisition to be treated as a compulsory purchase, as opposed to what amounts to theft, and that they ought to get what they were worth at the time they were taken?