September 26, 2007 (LPAC)--Sell bankrupt Northern Rock, immediately, the lead editorial in London's Financial Times shrieks today, because "with every minute it spends in the central bank's intensive care unit," it is becoming more worthless.

Last week, Britain's Northern Rock became the international poster child for banks bankrupted by the subprime housing crash. The Bank of England, which had initially refused any bailout, did an about-face, and offered Northern Rock a $3-billion line of credit on Sept. 14, after days of TV footage of depositors queuing to withdraw their money.

Now, the Financial Times says, there are three options: sell it to another bank for anything above zero--and thus offload another 30-billion pound payment that Northern Rock can't make. The other option is to sell off its loan portfolio and its mortgage portfolio in pieces--preferably waiting as long as possible to sell mortgage part, which is now virtually worthless

Furthermore, the London financial paper disclosed that the British bank supervisory body, the FSA, sent a detailed "Liquidity Questionnaire" to all banks last week, asking them how they plan to pay future commitments. The aim, the Finanical Times reports, is to "pinpoint" the next collapse.

Questions are now being raised about where, and how long, other small British banks, such as Britain's Alliance & Leicester (A&L) and Bradford and Bingley (B&B), as well as the 50 so-called "Building Societies" can continue to get funds.

With the capital markets effectively closed because of huge demands for liquidity, the report that Newcastle Bank relies on the capital markets for 77% of its funding is bad news. A&L and B&B depend on the capital markets for 50% of their funding, and are said to be solvent until some time in 2008. However, A&L, B&B, and the Building Societies all have large amounts of short-term paper and medium-term funding that will soon mature.