As most people in the UK will be aware, the current economic woes that beset the UK economy started with the first run on a UK bank since 1886 – the bank in question was Northern Rock.
No one seemed aware in the heady days of 2007 that the cycle of boom and bust had returned. The first anyone here knew about it was from the long queues that started to appear outside every branch of the bank with customers wanting to withdraw their hard-earned savings.
It is very rare that one can firmly grasp why these disasters occur, but it is easy to understand why Northern Rock nearly collapsed after reading The Fall of Northern Rock by Brian Walters.
Brian, previously an employee of Northern Rock, has first-hand experience of what it was like to work for the bank. In the book he remembers how the bank was so hugely successful, he also details what lead to its spectacular collapse.
Having read the book it is easy to understand why in the days of cheap credit it was easy for a financial institution to expand. It is also easy to understand why, given the massive freeze in the credit markets, why the bank collapsed so spectacularly.
The question that comes to mind have we really learnt anything from the crisis and put in place systems to prevent such things happening again?
Sure, banks are now required to hold more capital, also banking regulation has been strengthened. Even a standard has been published for UK financial organisations to follow to help them ensure they are compliant with the relevant legislation, BS 8453:2011
Me thinks we haven’t really learnt that much – may be those in positions of influence at UK financial should read this book and learn how to not repeat the same mistakes as those at Northern Rock……we’d all be better off if they did!