The news at a glance

Northern Rock: Britain takes over

The subprime mortgage crisis has another casualty—British mortgage lender Northern Rock, said Julia Werdigier in The New York Times. The British government announced this week it would nationalize Northern Rock, which had been crippled by investments in bad U.S. mortgages. “It was the first nationalization of a bank in more than a decade and a huge blow for the administration of Prime Minister Gordon Brown.” The Labor government had resisted nationalization, which “recalled the 1970s, when such takeovers led to the decline of the economy and the end of Labor Party control.”

The government went ahead with nationalization after rejecting takeover proposals from entrepreneur Richard Branson and Northern Rock’s current management, said Jane Croft and Chris Giles in the Financial Times. Neither bidder would promise that taxpayers’ loans to the bank would be repaid. Northern Rock shareholders may lose their entire investments in the government takeover. Robin Ashby, founder of a group that advocates for the bank’s individual shareholders, said he was “shocked and appalled” by that decision. The government said it opposed using taxpayer money to bail out shareholders.

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The Fed: Bernanke hints at more rate cuts

Federal Reserve Chairman Ben Bernanke “left the door open for a sizable interest-rate cut next month,” said Sudeep Reddy in The Wall Street Journal. Bernanke told the Senate that 2008 economic growth would be restrained by tighter lending standards brought on by spiraling mortgage defaults. The next cut may be the last for a while, though, because the Fed wants to assess the effect of five rate cuts since last September.

Banking: UBS sees trouble ahead, trouble behind

UBS, Switzerland’s biggest bank, last week reported a staggering $11.28 billion loss for 2007’s fourth quarter, said Ernest E. Abegg in the Associated Press. Chief executive Marcel Rohner blamed “the sudden and serious deterioration in the U.S. housing market,” and the bank’s large holdings of subprime mortgage–related securities. The bank added that 2008 would be “another difficult year.” Analysts found one encouraging sign: “UBS appears to be reducing its holdings of toxic securities.”

Hedge funds: No exit for Citi investors

Citigroup last week barred investors in one of its hedge funds from redeeming their holdings, said David Enrich in The Wall Street Journal. “Investors tried to yank more than 30 percent of the fund’s roughly $500 million in assets” after their value plunged 11 percent last year. Citi has injected $100 million into the fund, CSO Partners, whose manager, John Pickett, resigned after investing more than half the fund’s assets in loans to a German media group.

Agribusiness: Record beef recall

The U.S. Department of Agri­culture this week issued the largest-ever beef recall, ordering the destruction of 143 million pounds of beef from the Hallmark/Westland Meat Packing Co. of Chino, Calif., said Victoria Kim and Mitchell Landsberg in the Los Angeles Times. A widely viewed video shows workers at the plant using water hoses and a forklift to bestir cattle too weak to walk into the slaughterhouse. “The video raised questions about whether so-called downer cattle were entering the food chain,” in violation of federal law. Downer cattle are banned to prevent livestock with mad cow disease from entering the food supply.