You really rather have to admire the bravado on display here:

Northern Rock stands accused of “reckless” lending after it emerged this weekend that the beleaguered bank is still offering mortgages of six times salary to potential borrowers.

Despite provoking the worst banking crisis for decades, the bank last week offered a reporter posing as a first-time buyer a £180,000 mortgage even though he had a salary of only £30,000.

The loan was at least £30,000 more than other leading lenders were prepared to offer. Repayments for the loan would have accounted for more than 60% of the fictional buyer’s take-home salary.

The reporter, posing as another potential customer, was also offered a so-called “negative equity mortgage” worth 117% of the value of the property he claimed to be interested in buying. The mortgages offered by other banks to the same potential borrower were significantly lower.

Don't forget that this sort of lending is now being supported by the taxpayer's money: even if it is at a high interest rate.

It's also worth remembering that none of these loans (or rather, no more than usual) have actually gone wrong yet. The credit crunch and the run on Northern Rock were all caused by problems on their funding side, on their finding money to lend out. Now, with slowing house prices (or even the possibility of falls in them), we might actually find ourselves facing interesting times. What are people going to do with such loans when they're losing them, not making them, money? Might they start to default?

If they do it will indeed be interesting times for of course, thanks to Alistair Darling, we taxpayers are on the hook for over £100 billion of such loans. Happy Days, eh?

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