Will other banks end up being nationalised?

The government recently announced that the ailing bank, Northern Rock, was being nationalised, and this move came despite opposition from the Conservative party and some other industry sectors.

There is now speculation as to whether the new Bill that was passed to allow the nationalisation of Northern Rock will also make it far easier for other banks and financial institutions to be nationalised if they run into similar problems.

According to government officials no string of incidents amongst financial institutes is likely to occur. However, some officials have said that there are concerns because of the generalised nature of the new Bill and how quickly it was rushed through parliament recently.

Adding to the concern is that fact that the Chancellor of the Exchequer, Alistair Darling, did admit that the Bill ‘potentially applies to a range of financial institutions’.

However, Darling also added: ‘I want to make clear that the Government has no intention at present to use the Bill to bring any institution into temporary public ownership other than Northern Rock.’

Concerned officials and consumers have expressed concern over how the global credit crunch could hit the larger banks hard, and how any further nationalisations could affect the taxpayer’s money.