...but building societies are crying 'foul' over unfair competition.

The Government's plan is to divide Northern Rock's business into two: one part keeping the 'good' business in order to attract private sector bidders, the other part taking care of the 'bad' business that got it into trouble in the first place.

Building societies think this is unfair, as it will introduce a competitor without the burdens associated with the credit crunch.

The European commission is investigating the Government's plans for Northern Rock this week.  Attempting to protect its members against a new and unhindered competitor emerging, the Building Societies Association is urging the Commission that the healthy half of Northern Rock should pay financial penalties if the plans go ahead.

One thing's for sure: the government can't leave Northern Rock as it is, and with the banking sector not in the best of health, it'll probably be necessary to seduce bidders with some kind of restructuring.

However: the building societies have a cause worth sympathising with.  They far less to blame for the credit crunch than banks are, and Northern Rock shouldn't get a free pass back into the market.

What do you think - how would you resolve the conflict?

Bradford & Bingley has admitted huge losses caused by bad debts.

Its savings and deposits business has been sold and now sits under the Santander umbrella, leaving the nationalised B&B with only its mortgage and loan book.  And what a bad one it is...

Out of £40.3bn out on loan, the bad debt total now stands at £328.4m. That means it has quadrupled in a year.  The culprit? Mortgage arrears.

This is probably a symptom of B&B's over-keen lending during the boom, combined with its none-too-smart acquisition of a tranche of adverse credit mortgages from Kensington and GMAC just in time for the credit crunch.

We also wonder whether there could be a touch of carelessness from lenders still stuck with B&B, hoping to break free one way or another and allowing their loans to fall into arrears.  I'm not sure I'd want my credit rating affected by doing that, but then if you have poor credit in the first place, where's the loss?  Just a thought...