Editor's letter

While financial institutions in the private sector work together in pursuit of a solution to the liquidity problem dogging the markets, the Chancellor of the Exchequer continues to pour money into Northern Rock: public exposure to the ailing bank now stands at £40 billion, taking emergency lending via the Bank of England and the state's guarantee of deposits together. Alistair Darling, it appears, is hoping a private buyer will appear and take the problem out of his hands, but even the favoured bid by Virgin does not envisage final repayment to the Bank within the next two years. As a going concern, entire in itself, it still looks like the Rock's days could be numbered if this latest bid fails.

Turning to the private sector, which has clearly decided that Northern Rock is too risky a bet unless it comes cheaply, genuine attempts are being made to negotiate the fallout from this summer's volatility. It is not clear if the so-called 'super conduit' M-LEC will be a sufficiently robust intervention to reverse the declining fortunes of the structured investment vehicle (SIV) market, but at least the banks involved are directing their best efforts at finding a solution.

In November members of the Treasury Select Committee distinguished themselves by being overheard condemning representatives of the credit rating agencies as "all foreigners". The ensuing questioning was scarcely more enlightened in parts, as it became clear that the MPs on the Committee weren't entirely familiar with what rating agencies actually do. Maybe they should turn their attentions closer to home.

- Matthew Attwood, Editor.

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