Robert Peston’s reporting for the BBC of the whole Northern Rock saga has had a “blame Mervyn” undertone to it. Today he basically peddles one of the two Treasury favoured spin lines;
- The Treasury’s primary spin-line is that it is all because of the sub-prime crisis in America and that no one could predict it coming.
- The second line of spin is that it is the Bank of England’s fault for not flooding the market with liquidity when trouble came.
The first point is easy to deal with, Mervyn saw it coming as did half the City, that is why Northern Rock shares halved long before the headlines. The blame really lies first and foremost with the board and management of Northern Rock….
The second line of Treasury spin is that the Bank of England should have flooded the markets with liquidity. That is never generally a good idea for an institution obliged to fight inflation….
The blame lies not with Mervyn King but squarely with Northern Rock’s management. The Northern Rock board took the risk in their dash for profit growth, a risk that should have been spotted at board level by their risk management committee chaired by Sir Derek Wanless.
Elsewhere, Guido reminds us that Sir Derek Wanless is a new Labour favourite, that Northern Rock is regarded as a Labour heartland bank and reveals that Northern Rock has, apparently, made substantial donations to the Institute for Public Policy Research (IPPR), New Labour’s favourite think-tank.
Do read the rest of Guido’s analysis.
Thank you to reader Bodo for the link.
Yes, presumably this will be another story where the beeboids manage not to report such items as the fact that gordon’s personal pollster (but paid for by the taxpayer), happens to advise Northern Rock on ‘charitable donations’ , the biggest of which happens to be to gordon’s favourite ‘think tank’.
This is classic corruption as practised for years by politicians on the sub-continent – India’s Congress Party developed it to a fine art and nulab , aided by an institutional blind eye from their chums at the bbc are catching on fast !
and not just that, but Robert Peston is son of a Labour Lord, and at this time when Business News has become headline news is spinning the Labour line, and attacking the Governor and defending the Labour government.
Hardly impartial, more like news-engineering.
I could be wrong but wasn’t the oversight of financial institutions transfered from the Bank of England to the FSA a few years ago? So should not the focus be on why this agency is not fit for purpose, rather than why the Bank of England did not chuck enough billions of pounds out of the window in order to save a reckless borrower from the consequences of its own foolishness?