Bank of England Saves Norther Rock Bank
From FXPedia
In the fall of 2007, Bank of England Governor Mervyn King found himself in the center of a firestorm over the liquidity issues facing the Northern Rock Bank. Despite early protestations to the contrary by King, the Bank of England ultimately provided emergency funds to enable Northern Rock to meet its deposit liabilities.
Northern Rock was on the brink of foundering because it was unable to secure short-term loans in light of the global credit crunch brought on by the subprime mortgage failures. Potential creditors fearing the quality of the collateral Northern Rock was offering, refused to provide financing and it soon became clear that only a move by the bank of England could restore confidence in Northern Rock.
In what can only be described as a scene harkening back to the "bank runs" of the Great Depression, Northern Rock customers lined up at branches across the country to withdraw their savings convinced that the bank's collapse was imminent. To restore confidence in the banking system, the Bank of England stepped in with guarantees sufficient to cover Northern Rock's obligations.
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