The Trans-Atlantic Money-Go-Round

From The Metro:

Nationalised lender Bradford & Bingley said today that it was writing off more than £500 million in mortgage loans turned sour... The firm said 4.6% of its £41 billion mortgage book was three months or more in arrears, or repossessed.

I posted this over at HPC with the comment that a one per cent write down on its mortgage lending didn't seem nearly high enough. Little Professor responded by linking to this article on Bloomberg from mid-2008:

Bradford & Bingley Plc, the U.K. lender struggling to raise cash in a rights offer, must honor a 2006 deal to buy about £2.1 billion ($4.1 billion) of mortgages by the end of next year from GMAC LLC.

Customer payments are more than three months late on 5 percent of loans already purchased from Detroit-based GMAC, whose mortgage unit disclosed in a filing today it got $2.88 billion in emergency funding. That arrears rate is more than double the average for mortgages held by the Bradford & Bingley...

"This is what has spooked everybody," said Alan Beaney, who manages $2.1 billion of stocks as head of investments at Principal Investment Management in Sevenoaks, England. "They are committed to keep buying these things."

Bradford & Bingley first agreed in 2002 to buy loans from GMAC, now controlled by Cerberus Capital Management LP, the New York-based private equity firm. Steven Crawshaw, who stepped down June 1 as Bradford & Bingley's chief executive officer, formalized the deal in December 2006 and committed to buy as much as 4 billion pounds of loans a year through 2009.

It's not actually clear whether US taxpayers are now (indirectly) bailing out a UK bank or UK taxpayers are now (indirectly) bailing out a US bank, but surely this is complete and utter insanity.