Too big to fail, too troubled to buy

Northern Rock probably isn't the last banking institution that will revert to government ownership as part of the ever-widening credit market mess. This report from the Telegraph has all the details:

Alistair Darling nationalises Northern Rock

Northern Rock was taken into public ownership after the high-profile Virgin bid was judged to be "out of the ballpark" in terms of value to the taxpayer.

In an acrimonious conversation on Sunday afternoon with Virgin boss Sir Richard Branson, Alistair Darling, the Chancellor of the Exchequer, broke the news that the entrepreneur's demands were impossible for the Government to accept.

As late as Saturday, Mr Darling and the Prime Minister had hoped a private-sector deal to rescue the troubled bank could still be achieved without compromising public funds.

But by Sunday morning, it came apparent that Sir Richard's offer, and a second bid from the Rock's board, the only deals still on the table, involved far too great a public subsidy, with limited returns to the taxpayer.

The announcement that Northern Rock would, despite Gordon Brown's increasingly desperate efforts to secure a private sector deal, be nationalised after all came after a weekend of hurried phone calls, cancelled holidays and rushed meetings.

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This week's cartoon from The Economist: