by RAY FLEMING
THE first indications yesterday were that Alistair Darling's pledge that the British government would cover all deposits in Northern Rock had served to quieten anxieties among investors in the bank. In most places the queues of those wanting to withdraw their money had melted away and there were even reports of people asking to open a new account.
For the most part the Chancellor's bold move has found conditional approval from financial commentators in the media. However, the Daily Mail's attempt to liken the Northern Rock crisis to the Conservative's Black Wednesday disaster of 15 years ago and to describe Darling's move as panic-stricken was evidence only of that newspaper's determination to do down the Brown government on every issue regardless of the facts of the case.
It is clear that the guarantee to Northern Rock investors can only be a short-term solution for a situation of this kind. Furthermore it raises difficult questions about the precedent it has set and the extent to which others who have suffered financial losses not of their own making might ask that it should be applied, even if retrospectively, to their cases. There is another question over the role of the governor of the Bank of England in this affair, which has seemed to be unduly passive. Ultimately, though, it is the managers of Northern Rock who have most to answer for in building an aggressive and profitable business on very shaky foundations, and failing to act to shore it up quickly enough.