And Now Paragon?

Can I admit to a little soupcon of non-understanding here?

As Northern Rock's shares fell to another low of 97p yesterday - they were £12.50 in February - Paragon, which specialises in lending to buy-to-let investors, saw its shares crash to 125p and admitted it might have to close to new business.

Mortgage provider in distress, no, I've got that.

The lender is in trouble because it has a very similar business model to Northern Rock - relying entirely on the wholesale money markets to fund its mortgage business. Paragon does not have any customer deposits so is at the mercy of commercial banks to lend it money.

Erm, but a couple of months back we were told that this was the only problem NR had. That it depended upon the wholesale markets for its funding, and thus when those markets were closed to it it fell over.

If Paragon has the same business model, why hasn't it already fallen over, given that the markets will have been similarly closed to it?

What is it I'm missing?

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