Northern Rock, a bank in England that is their fifth largest mortgage lender, has been decimated hit by the subprime crisis, and will probably be sold to a consortium to stave off what was becoming into a run on the bank.
I assume the only way anyone would buy Northern Rock is by purchasing its loan portfolio assets at pennies on the dollar. They got into trouble by borrowing short-term money to re-invest at long-term higher rates offered by mortgages, a risky strategy made worse by being leveraged. It all blew up when the underlying mortgages became highly risky investments and the margin calls started, leading to a death spiral. ThenÃ‚Â the Bank of England attempted a bailout, which only made things worse by panicking depositors , who thenÃ‚Â began withdrawing money inÃ‚Â huge quantities. Computer systems crumbled under the load, and bank branches ran out of money. Which of course just spurred more to withdraw money.
There will be more like them, both in England and here.