Newspaper article The Journal (Newcastle, England)

Why Wasn't Rock Given the Same Help as Others?

Newspaper article The Journal (Newcastle, England)

Why Wasn't Rock Given the Same Help as Others?

Article excerpt

Byline: Mike Kelly Reporter

ANORTHERN Rock boss at the time of its collapse has accused the Bank of England of treating the Newcastle-based company less favourably than other banks in it handling of the financial crisis.

The comments of the insider came in response to the publication yesterday of previously secret documents.

They revealed the minutes of top-secret meetings of the bank's governing body - called the Court - between 2007 and 2009.

Our source, who did not want to be named, said: "These minutes seem to confirm the Bank of England was wholly unaware that its public announcement of an emergency loan to Northern Rock in 2007 would lead to a run on the bank.

"They also confirm that the Bank of England was able to extend covert emergency loans to other banks which it had refused to Northern Rock."

The documents have come to light after a four-year fight by the Treasury Select Committee to make them public.

They showed Bank of England bosses were unprepared for the impending crisis.

In July 2007, the Court was told the Bank was working on a new model to detect risks to the financial system, but there was little suggestion of any impending trouble. Less than a month later, on August 9, the French bank BNP Paribas came clean about its exposure to sub-prime mortgages, in what some believe was the start of the financial crisis.

Six weeks after that, despite some turmoil in financial markets, Court members were told to have confi-dence in the triple oversight of the Bank of England, the Treasury and the then Financial Services Authority (FSA).

"The Executive believed that the events of the last month had proven the sense and strength of the tripartite framework," the minutes asserted for September 12, 2007.

Yet the following day, September 13, 2007, members of the Court were called to an emergency meeting, just as the BBC reported that Northern Rock had applied to the Bank of England for a rescue loan. …

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