The Rock was built on sand. That's the main conclusion to be drawn from The Crunch, a rattling overview of how the credit squeeze compelled the UK Government to nationalise Northern Rock, a once sleepy building society turned financial engineer.

Less than a year after Northern Rock's bailout by the Bank of England triggered the first run on a UK lender's deposits in 140 years, journalist Alex Brummer has reconstructed the story of the bank's downfall and the broader market meltdown.

Brummer blames the mess on people ranging from UK Prime Minister Gordon Brown and Bank of England Governor Mervyn King to the "over-ambitious, imprudent and foolish bankers who caused the sub-prime debacle". His harshest criticism, though, goes to Adam Applegarth, a keen cricketer and soccer fan who joined Northern Rock as an executive trainee in 1982 and became its CEO at age 38.

Applegarth comes across here as a man who dismissed risk when the company boomed and was out of his depth when it foundered. In his hunger for market share, he committed the classic error of borrowing short and lending long – a combination that ultimately pushed the bank to the brink, says Brummer, who edits the financial pages of Britain's Daily Mail.

Northern Rock continued to expand lending even after rivals began battening down the hatches amid signs of tighter credit in early 2007.

Though the bank wound up with 20 per cent of the UK mortgage market and a record high share price that February, it did so by loosening lending requirements.

The bank's "Together Loan", for example, allowed first-time homebuyers to borrow 125 per cent of the value of the houses and six times their annual income – about double historical benchmarks.

The bank financed such mortgages by borrowing hundreds of millions of pounds from other banks and selling repacked mortgage debt. It funded an estimated 75 per cent of its total lending with borrowed money, according to one UK lawmaker quoted here.

That compares with 25 per cent at leading rival Lloyds TSB Group.

The result: Northern Rock was so overstretched that its business model cracked last August, when banks stopped lending to each other. As credit ran dry, Northern Rock turned to the Bank of England for emergency lending – a disclosure that sent depositors racing to branches to withdraw their savings.

"Applegarth and Northern Rock falsely believed that the only path was onwards and upwards, but he and the bank had badly miscalculated," writes Brummer, clearly irked that the ex-CEO got his full 2007 salary of £760,000 (Dh5.5 million), non-cash benefits of £25,000 and a £346,246 pension.

As the Rock shuddered, UK regulators were also found wanting. Brown's tripartite system of having the Treasury, the Bank of England and the Financial Services Authority supervise markets failed the first major test since its inception in 1997. The FSA under Hector Sants was "asleep at the wheel" in failing to spot Northern Rock's inherent weaknesses, while Bank of England Governor King was slow to fight the fallout of the credit squeeze, writes Brummer. Chancellor of the Exchequer Alistair Darling failed to give the impression "of a man in charge of events", he says.

The Crunch is enlivened with anecdotes about people caught up in the crisis. Brummer describes how European Central Bank President Jean-Claude Trichet was on a sailing holiday off the coast of Normandy when markets seized up on August 9. We also meet a recently widowed Northern Rock customer who was told – weeks before the bank run – that her savings were safe.

Brummer deserves praise for producing The Crunch so quickly, even though he doesn't break much new ground and his writing can be hackneyed: The bespectacled King is "owlish", a female bank lobbyist is "elegant and fearless". These are minor annoyances for such a handy first draft of history.

"Clearing the detritus of the credit boom of recent years will be a long-term process," Brummer concludes. "The fear must be that the real economy of growth, jobs and rising living standards could be affected well into the next decade."

The Crunch can be ordered online for Dh56 from www.amazon.co.uk.