Ten years ago one of the norths greatest Success Stories hit the wall. Tonight in a special programme we ask, why did Northern Rock rumble . This was a barrack which had been frankly run into the ground. The bank of englands top man tells us the bank of englands top man tells us he was stopped from a secret rescue to save it. My advice was very clear, that we should not reveal publicly the fact that we were going to lend to Northern Rock. And we meet the people who paid the price of the collapse. I was devastated. I didnt know how we were going to manage, how we were going to turn, and just thinking my vision to give him the best life possible under the circumstances was just suddenly wiped away. Im Chris Jackson and this is inside out. Ten years ago, this was the scene outside Northern Rock branches all over the country. Customers were desperate to get their money out. It was a classic run on the bank. In newcastle, Veronica Craig was trying to persuade people she had known for years not to abandon the rock. I was walking up and down this queue talking to customers i knew personally and saying, what on earth are you doing . They were saying, its all the money weve got. Some had arrived at dawn, a few with hundreds of thousands of pounds each in Northern Rock accounts. I think theyre going to run out of money altogether. It isjust a colossal shock. I dont think ill ever trust the Banking System in this this country again. Theyd be crying, id be crying, some people would say, i just got off the bus and saw the queue, i thought i betterjoin the queue. It was really, really upsetting. This was the trigger. One of britains biggest mortgage lenders needs Emergency Support from the bank of england. Northern rock has problems raising money because of the crisis in the financial markets. It was the first run on a british bank since 1866. Customers are being told not to worry. The bbcs Robert Peston broke the news. There is no suggestion that this business is fundamentally bust, but merely running out of money in this way for a bank is extraordinarily serious. The way that i got the story was really Old Fashioned journalistic detective work and i was confident i had all the pieces of the puzzle and i would be able to report that they were going to the bank of england cap in hand to be propped up. The rock had been flying high. It was lending around a fifth of all the mortgages in the uk. But it was running out of money. The reason was the rocks business model. Instead of borrowing from its customers to finance its mortgages, it was getting 75 of its money from other banks, but in august 2007, those at the banks turned off the taps and hung on to their money. The cause lay on the other side of the atlantic. The us banks were panicking. For years they had loaned billions in mortgages and house prices were going down. There was a ripple that turned into a tidal wave. Theres a saying that when the tide goes out, you soon find out who isnt wearing trunks. In 2007, us house prices crashed, exposing millions who couldnt afford to pay their mortgages. The banks had huge bad debts so they stopped lending to each other. 4,000 miles away, Northern Rock and its staff soon paid the price. So why Northern Rock before any other bank in britain . We approached a number of very senior insiders to get their version of events. Only one, who wishes to remain anonymous, would talk. The insider claims the problems in america happened just as Northern Rock was trying to get one of its regular loans from other banks. If it had been a month later, Northern Rock would have been able to borrow the money it needed. It would have been in one of the strongest financial positions at that time. Whether or not it was that simple, it led to the collapse of Northern Rock. And a lot of pain. Stephen gill, once he worked for Northern Rock, until the run. I had never even heard the term run on the bank before that day. I didnt know what to make of it, didnt understand it. There was a lot of nervousness about. We were trying to do our work but at the same time we are looking at the bbc news website to see what is happening to the share price. Soon the heat was on. The rock began a three Year Programme of job cuts. The workforce fell from more than 6,000 to 2,000. Staff at newcastle based Northern Rock today learned the bank wants to cut a further 680 jobs. Unions described the news as appalling. When you start seeing people who have been there a long time and you know they are good at theirjob suddenly get made redundant, you start feeling then nobody is safe. I was scared for myjob, yes. Stephen took redundancy. There was so much uncertainty. I didnt know if there was an end coming or not. Just by chance this place came along and its only around the corner from where i live as well, so ijust had to take the plunge and see if i could do this. So if the bank had survived, would you still be there . Oh, yeah, definitely. I was there 12 years and i enjoyed every single one of them. So, could the crisis have been avoided . Weve been told yes, if another bank took over Northern Rock. In fact, the rock had been trying to arrange a takeover by lloyds since august. But our insider says the rescue deal was scuppered by the bank of england. We came close. Lloyds were keen but they wanted a bank of england guarantee for the money. There would have been no run. The bank of england refused. But two of the men deciding the banks future deny it was ever a serious offer. I would have welcomed any approach that was going to work. The problem was lloyds showed an interest for a couple of days but nothing they never made any offer or anything like that. Lloyds never came to me and said, would you lend to enable us to buy Northern Rock . I think they did it because they knew that it was pretty silly for them to ask for money that was special subsidy to them. So a fire sale of Northern Rock to lloyds was never going to happen . It was never going to happen. Its a red herring. So, the lloyds takeoverfailed, but its claimed the bank of england could have saved Northern Rock by giving the rock cash. But behind closed doors. In other words, a secret deal. The bank of england lends the money. It doesnt tell anyone. The rock gets through its cash shortage and back on its feet. The markets know nothing. The Northern Rock insider said they wanted to do just that a secret deal. Lending without letting the markets know would have got us through but we were told it was illegal. This was made available to other banks a few months later to the tune of more than £61 billion. But the bank of england governor flatly disagrees. He says it was Northern Rock and the regulator, the Financial Services authority, who wanted to make the loan public. Northern rock itself and fsa all felt that it would be a good idea to reveal it. My advice was very clear, that we should not reveal publicly the fact that we were going to lend to Northern Rock. But the advice of the lawyers and the fsa was that this could not be done, it was against a european directive. Actually, none of my colleagues in europe believed that for a minute. We asked the former fsa head, sir hector sants, to respond. He said it would be inappropriate for him to comment. Is there another explanation why Northern Rock wasnt saved . The senior insider says the rock was punished for being northern. We were seen as a bunch of northern spivs who deserves what they were getting. No, i dont think thats true at all. After all, other banks also failed in the same way. Northern rock was perhaps unfortunate in being at the front of the queue, but it wasnt different in nature from the other banks and the other banks also failed. So, no lloyds takeover. No secret loan. The bank of england was preparing to announce it was providing emergency cash. It looked like they could avoid much of the storm, until Robert Peston stepped in. He became saint and sinner. One of britains biggest mortgage lenders, Northern Rock, is applying to the bank of england for emergency financial support. Fear has been stalking the markets for weeks now. The mere fact that the bank of england has stepped in will actually worry people tomorrow. I suspect we will see shares coming off a bit. I was accused of destroying Northern Rock, trying to bring down the entire british Banking System, the british economy. Its all bollocks. I was simply reporting on the reckless behaviour of banks, including Northern Rock. The media put the knives in and destroyed the reputation. If somebody is in trouble and they fall down, the Good Samaritan story, you can help them up or you can kick them in the balls and steal their watch. That is what happened to us. Somebody stole our watch. I would struggle not to punch Robert Peston in the face if i saw him. Peston reported in a way that suggested the bank was bust. Having spoken to senior officials, i can tell you that they are saying there is no reason for depositors to panic. In a way, telling people not to panic when their life savings are going is potentially the reason they do panic. I dont think thats right. I did say, for example, that i thought it very unlikely that depositors would lose any money. Were you really a journalist with an ego who saw personal opportunity . Indeed, looking back at the events that it triggered off, would you do exactly the same again . Under the rules, the moment that Northern Rock request emergency help from the bank of england in that way, it has failed. That is an event. If i had not reported that event, i would have been guilty of playing god in an incredibly patronising way. I would have been effectively saying that adults were not capable of understanding the significant information and that would have been an appalling thing for any journalist to do, to withhold serious information of that sort from the public. He did it in a very responsible way and i dont think in any way you can blame Robert Peston for the consequences that there was. The rocks small number of branches and its online payment system, which crashed, stoked the panic. I couldnt get on the internet from wednesday onwards, couldnt get our money, couldnt get into branches. That started us getting worried. But a major cause of its problems may lie a decade earlier when it changed from a Building Society to a bank. That freed it to take more risks, pursue profit and its claimed, under its swashbuckling boss, it did both. Adam applegarth was a very interesting character. He was fun, jack the lad, he gave it plenty all over the place. He was larger than life. Applegarth was a sunderland lad with a passion for fast cars. And a salary of more than £1. 25 million. Hed never worked anywhere else. The analysts lapped it up for a while, they couldnt get enough of him. And he thought he walked on water. But he hadnt done his homework properly. Its not in our interests or our borrowers for them to overextend themselves. The lessons of the early 905 are burned onto all our hearts. Not burned enough for city insiders. Its a peoples business. In a peoples business, you have to make sure that they respect you, that they like the way you grow your business, that you havent been ridiculously aggressive, and that you havent overstepped the mark. He didnt tick any of those boxes. They knew there was trouble at the mill, as they say, and they knew this couldnt go on at this level without there being a heavy fall at the end of it. The city saw two problems. The rock was getting around 75 of its money from other banks, and it appeared to be taking risks to get business. Its claimed basic checks like proof of identity were being ignored. We were told by senior managers just to override them. Just get the applications through, because the Half Year Results were coming up or the yearly results were coming up. It seems you are giving mortgages with no real checks. Yeah. Pretty much, yeah, but it wasjust to show that the company was continuing the growth that applegarth wanted. Juicy offers likely to get a mortgage were used to tempt customers. The Northern Rock is advancing 125 of the value of a home to first time buyers, an offer the Building Society denies is reckless. Together was a 95 mortgage. But it also came with an unsecured loan of up to £30,000. And that, it is claimed, attracted crooks like bees to honey. From day one, it was targeted for fraud. Someone was arrested and the police rang and said, do you know this chap has nine Northern Rock together mortgages with you . Directors were caught hiding thousands of bad debts. One of its former bosses emerges from his home this afternoon, admitting he failed to expose the extent of the banks problem loans. I accept full responsibility for my own actions. The rock still had a majority of good mortgages, but arrears rose sharply. Tens of thousands were behind in payments. The bank of england became alarmed. Once we started to lend to Northern Rock, then of course, they gave us some of their mortgages as security on those loans, and our staff had to examine those mortgages. And as time went by, concerns were raised about whether these mortgages were quite as good as they had cracked up to be. The Treasury Select Committee delivered its verdict. First up, chairman matt ridley. You had to borrow billions of public money from the bank of england, youve damaged the good name of british banking. Why are you still clinging to office . I would like to say that what has happened has been extremely distressing to us, as it has been to other stakeholders, shareholders, employees and creditors. Then it was Adam Applegarths turn. But this is a humiliation. Have none of the board any sense of honour . Has nobody offered to resign . I feel great regret for the anxiety our retail customers have seen. Within weeks, both had resigned. We asked both matt ridley and Adam Applegarth to be interviewed in this programme but both declined. But does the blame lie solely at the door of Northern Rock . He is now politically a dead man walking and if the Prime Minister could actually make a decision, he would move him. Was your eye off the ball with this one . When i became chancellor in the summer of 2007, and when you become a new minister you will sit down with your officials and say, these are the things you need to worry about. Financial stability was simply not mentioned. Five months after the crisis started, ministers now decide that Public Ownership is the best option. After the rock was nationalised, it was revealed shareholders would get nothing. Many were rock employees who had held onto their share bonuses when the run began. They thought it still had a future. But in my mind, i was thinking, you know, this will blow over, the share price will come back up, Northern Rock will survive. We will get through this. My shares were just in excess of £60,000. Stephen lost the lot. I think ive got mug written on my forehead now. I liked Northern Rock, because it was a north east company. And i thought they were developing very well. Brian has been campaigning for years to recover the savings he ploughed into rock shares. How much money did you put in . Altogether, by the time it finished, i put in over £400,000. But never in your Worst Nightmare would you have thought that the government could make new laws to be able to take the company away from the owners. It was actually life changing. It was everything to us. Marilyn sterry was about to cash in her partner pauls shares. They were worth £12,000. The money was to buy a mobility car. I was devastated. Didnt know how we were going to manage, how we were going to turn. And just thinking, my vision to give him the best life possible under the circumstances was just suddenly wiped away. Just very upset, very angry. It is very sad, its tragic, considering the importance to the north east of england, as well as shareholders, but from the governments point of view, it had to be fair to all shareholders and if we got ourselves into a position where we were paying out to people who had bought shares on the off chance they could pick up a bob or two, we would have been condemned. But while most shareholders lost, those who sold before the run gained, including some Northern Rock executives. When they were then encouraging staff to still buy into the share save schemes with their own earned money, theyjust decided to offload i think about £5 million worth of shares. It was actually quite a slap in the face to the staff. Adam applegarth alone was reported to have sold more than £2. 6 million worth at peak prices in the two years before the run. After nationalisation, the rock was split into a supposed good bank and bad bank. The bad bank, Northern Rock asset management, took over most of the mortgages. Its claimed a tough business regi