Northern Rock is step closer to nationalisation
Tuesday, 19 Feb 2008 13:28
Northern Rock is to be nationalised
Legislation to nationalize Northern Rock has been cleared in the House of Commons, despite Conservative opposition.
The bill was passed by 293 votes to 167 and will now go to the House of Lords.
The government is hoping the legislation will make it onto the statute books by the end of the week.
But George Osborne, the shadow chancellor, attacked Labour for including a clause that exempts Northern Rock from the Freedom of Information Act in the draft legislation.
Mr Osborne said: "The public is now paying for this bank. We are entitled to know what it is doing with our money."
There are also concerns the legislation is not specific to Northern Rock, and could theoretically be used to nationalise any national bank.
The emergency legislation was debated for almost ten hours last night before the final vote.
Northern Rock is reportedly attempting to shrink its mortgage and loans portfolio by telling independent mortgage brokers to recommend other banks, as it tries to become a savings bank.
The move follows uncertainty about the bank's legal position on nationalisation.
Legal experts have suggested the bank will not be able to compete aggressively with rivals on the high street as it would break EU rules.
The chancellor of the exchequer, Alistair Darling, announced the government's plans to take temporary ownership of the stricken bank last Sunday - following failed negotiations with private buyers.