The truth is that they had been lending money they didn't have to people who were a bad credit risk.

They borrowed money at interest rates that were fixed for only three months at a time and used it to offer 25-year mortgages to people with a poor credit history. When they had difficulty borrowing from other banks they "went bust".

The chief executive was shown the door and the Financial Services Authority, the Government's regulator, sacked the executive who had failed to notice what was going on.

Iain blamed the crisis in America for Northern Rock going bust but it was mostly a home-grown crisis. That is why the Northern Rock chief executive and the regulator were sacked.

Iain then said that Bear Stearns, the giant American investment bank, collapsed because they had invested in mortgage arrangements which were too complex for them to understand and they didn't know how these mortgages had been packaged and sold on.

But Bear Stearns actually designed their own mortgages, broke them up into small parcels, and repackaged them and then sold these mortgages all over the world.

When interest rates went up these poor people couldn't cope with the higher payments. Many of them have been evicted.

Iain said that Bear Stearns collapsed because of the "credit crunch" ie because other banks stopped lending them money. I'm afraid he is wrong again.

They were forced into an emergency sale because their customers rightly believed that they were on the brink of collapse and decided to take their money out.

Maybe Iain will respond to these points in one of his future Mail columns.

Jim Allan,
Hartlepool.