What were the first effects of the global crisis for the British banking system?
With the sub-prime market crisis in full effect, investors were turning away from the market which caused the US Government to rescue failing investors like Fannie Mae, Freddie Mac, and AIG and the consequence of this was that to let the 4th largest United States investment Company (with worldwide offices) Lehman Brothers filing for bankruptcy and fall into administration, thus causing major disruption in the United Kingdom. This was followed by financial institutions such as a Northern rock that was left with a liquidity crisis; they had to make their debt repayments but had no means of short-term funding. As a result, they turned to the Bank of England for emergency liquidity support. This sparked fear and panic among their depositors, and within a day customers had begun queuing for hours outside branches to withdraw their savings. Eventually, the government had to step in and guarantee their savings.