Is Northern Rock to blame for crisis?

Unlike other lenders, maverick boss Adam Applegarth chose not to rely on savers' deposits to fund the bank's lending. Instead it raised the cash by borrowing large sums on the international money markets - exploiting easy availability of cheap credit - and tempting borrowers with competitive deals.

The strategy has now come unstuck and, if the Bank of England had not stepped in, Northern Rock - which has seen its share price drop through the floor - would probably have gone bust.

Its non-executive directors should have spotted the flaw in the strategy pursued by Mr Applegarth, that the bank was at risk as soon as cheap credit ran out - a problem looming for
months because of the sub-prime crisis.

In its defenceFor an institution that began life as an obscure northern building society, Northern Rock's rise to become the country's fifth biggest mortgage lender was an impressive achievement.

It drew widespread praise for Mr Applegarth, a fanatical cricket player who turned down three jobs in London because they clashed with his sporting commitments, and who had shot through the ranks after joining Northern Rock as a graduate trainee in 1983 to become, in 2001, the FTSE 100's second youngest chief executive at 39. The bank can argue that it has been caught up in a worldwide financial crisis beyond its control and that if it can survive its short-term problems smoother times could lie ahead.