Just sent this letter to the Observer’s readers editor:
This article from Sunday 12 June has one of the most inaccurate sentences I’ve ever seen anywhere:
“Critics point out that it was a subsidiary of Northern Rock, Granite, that contained the liabilities that led to the collapse of the bank: Granite owned £49bn of mortgages that were sold by Northern Rock and moved offshore to the tax haven of Jersey.”
1) Granite wasn’t a subsidiary of Northern Rock, it was an umbrella term used to cover several different offshore organisations that were structured as charitable trusts and that specifically weren’t owned by NR.
2) Northern Rock didn’t have any liabilities through Granite – the whole point was that NR wasn’t liable for Granite’s debts. Rather, Granite’s bonds were secured against the mortgages that it bought from NR.
3) The collapse of the bank had absolutely nothing to do with Granite – it was because NR was reliant on short-term financing to cover the mortgages that it *hadn’t* sold to Granite, and this short-term financing dried up as the crunch began.
Perhaps Nick Mathiason should read the article I wrote on Granite last February before writing any more pieces that mention Northern Rock…
I’m genuinely not sure that I’ve seen a sentence that wrong-headed in a serious newspaper before, ever…