reality-based educator

Problems at Britain's fourth largest mortgage lender continue from last week:

LONDON (MarketWatch) -- Shares of U.K. mortgage lender Northern Rock dropped as much as 34% on Monday, retreating further following reports that nervous customers, worried the bank would go under, have pulled out 2 billion pounds ($4 billion).

Shares of Northern Rock, down 33% at 296 pence in mid-morning trading, have now dropped around 50% since the company announced it may get an unspecified amount of funding from the Bank of England. See last week's story on emergency bailout.

The fresh share-price drop to start the week comes as customers flocked over the weekend -- either lining up at branches, or via phone and the Internet -- to withdraw money from the lender. Northern Rock opened an hour early to meet the demands of customers wanting their cash.

As of last Thursday, Northern Rock had 24 billion pounds in deposits.

The news dented the British pound once more and dragged stock markets in the U.K. and Europe lower for a second day.

Reuters reports that Northern Rock doesn't have much exposure to subprime mortgage problems.

Rather, Northern Rock "got into trouble when global worries about the widespread repackaging of poor-quality debt made banks reluctant to lend to each other in August."

So Northern Rock is a victim of the credit crunch.

Wall Street hopes Uncle Ben's helicopter ride this week will help that credit crunch.

But until there is some transparency with the banks and people figure out who is in trouble and who isn't as a result of the subprime and Alt-A mortgage problems, it doesn't seem like the credit crunch is going to go away.

And the interest rate cut will not filter through the economy quickly enough to solve short-term problems in the credit market.