Virgin Money made a bid for Northern Rock in 2008, and in 2011 it got the go-ahead from the British government to buy the defunct bank.
Tamara and I were in London on the day that Northern Rock’s demise was being debated in the House Of Commons. Tamara had been invited to tea at the the House of Lords earlier that day, and I went to collect her.
We decided to walk down the corridor and watch the proceedings in the House of Commons. We stood in line and went through endless corridors to eventually find ourselves in the Visitors’ Gallery looking down on the Speaker and the assembled MPs.
It couldn’t have been better timing because, the House was at that very time debating the proposed takeover of Northern Rock.
The chamber was packed and the two sides of the House were arguing bitterly over whose fault it was that the bank had collapsed. Was it due to easy credit, poor regulation, bad tax incentives, sky-high commissions?
We watched the debate for a long while, looking through the new plexiglass screens along all sides of the chamber that separated the visitors from the MPs below.
Northern Rock’s Background
Northern Rock was a bank. It started out life as a Building Society, and its lending policy was governed by the Building Societies Acts, which meant it could only lend money against mortgages on property and that it had to follow the strict rules applicable to building societies.
Changes In Legislation: From A Building Society To A Bank
Northern Rock became a bank in the 1990s when, owing to changes in legislation, many other building societies were taking the opportunity to do the same. The advantages were that as a bank it could invest and also borrow more widely.
Unfortunately, the new latitude led to its becoming the first bank in 150 years of British banking to suffer a run on its assets. Trading between banks, is conducted on a short cycle. The borrower borrows for six months and must then repay unless a new borrowing cycle is agreed. Bigger banks decided they didn’t want to lend on Northern Rock’s lending portfolio and the Bank of England having to step in.
Northern Rock had of course bet on an international portfolio that was caught in the 2008 financial crash. It had gone out to play with the big boys and it had been caught short.
For the UK, the run on Northern Rock’s assets carried the risk of a total default, so the British government bought the bank.
Northern Rock wasn’t the only bank to fail. For whatever reason, the Government bailed out the Royal Bank of Scotland and LloydsTSB Bank, but it let Northern Rock go to the wall. Perhaps it wasn’t too big to fail, to quote the US authorities who rescued the biggest US banks.
Crown Copyright
As Tamara and I lined up to go into the visitors’ gallery of the House of Commons we were each handed a thin A4-size booklet that contained a copy of the day’s proceedings.
I would show you a photograph of the booklet, but it is Crown copyright. What that means is that I would need a licence to copy it.
Growing up in England, I was aware that Crown copyright protected all kinds of things from being copied to the detriment of the publishers – namely the Crown, the courts, Parliament, Her Majesty’s Stationery Office, and other similar institutions.
An American Perspective On Government Copyright
At least that was how I looked at it until I read Heather Brooke’s book The Revolution Will Be Digitised: Dispatches From The Information War.
Heather Brooke is an American who at the time was living in Britain. It was she who blew open the MPs’ expenses scandal.
In the book, which is mostly about Wikileaks and whistleblowers, she explains what Crown copyright is from her perspective, contrasting copyright in the United States and in Britain.
Originating with a principle laid down by Thomas Jefferson, all documents originating with the American government belong to the people.
That is why all Americans are free to copy, for example, Dorothea Lange’s world-famous photographs of poverty during the Great Depression.
In Britain the situation is different. And as Heather Brooke puts it, Crown copyright means that citizens have to ask their government for permission to use public data.
She found this out first hand when she made repeated requests for information about MPs’ expenses under the new Freedom Of Information Act and found that public bodies placed copyright notices on their responses.
Her view is that copyrighting of public information in Britain is specifically used as a means of restricting the flow of public information.
They Try To Work For You
As an example of what that means, in 2004 Parliament demanded that the They Work For You website shut down because it published details of how MPs had voted on matters in the House of Commons.
The information is published in the official records of Parliament known as Hansard, and Hansard is owned by Parliament and not by the people. So copying information from it is protected by Crown copyright.
In the end, Parliament was itself backed into a corner and was forced to grant a licence to They Work For You because the idea of suing a website for making such information available to the public was embarrassing to it.
One could say that democracy prevailed, but the reality is that TheyWorkForYou survived because it accepted that it needed a licence, and the Crown Copyright system sails on into the future.
Originally published November 17th, 2011