Sunday, Dec 16, 2007
In 2005 King dismissed warning that NorthernCrock business model was unsustainable
DailyMail: Bank of England governor was warned of Northern Rock collapse two years ago
King said the [UK personal debt] situation was being monitored by the BoE and under control. "The vast majority of the debt is secured against a property and it would be of concern only if that was not the case." Baroness Shephard asked: "We cannot understand how Northern Rock can undercut [building societies] with their borrowing rates all the time. Where are they getting the money from?" King minimized the issue "Northern Rock operates under different rules because it is a bank"
Posted by confused76 @ 04:02 PM (1067 views) Add Comment
9 Comments
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1. paul said...
So hang on, Mervyn King in 2005:
"Northern Rock operates under different rules because it is a bank."
Mervyn King in 2007:
"We don't really understand these banking mechanisms very well"
2. planning4acrash said...
King would have been better off saying something like this:
"The Bank of England was stripped of its regulatory role by Mr Brown, speak to the Financial Services Authority because bank operations have nothing to do with me, I am only allowed to set interest rates and act as a lender of last resort. Don't blame me when Northern Rock come to me for cash when on their last legs, it will be nothing to do with me if that happens and a run on the bank occurs. You also can't blame me if low interest rates cause a speculative bubble, because the treasury set BOE targets and have decided to loose control of RPI"
But instead, he's like, oh, its all under control, trust me. Maybe he isn't quite the man we are all led to believe, maybe they chose an unquestioning, company yes man. I see it happen all the time in organisations that are on the way down or don't have the will to change.
3. planning4acrash said...
King would have been better off saying something like this:
"The Bank of England was stripped of its regulatory role by Mr Brown, speak to the Financial Services Authority because bank operations have nothing to do with me, I am only allowed to set interest rates and act as a lender of last resort. Don't blame me when Northern Rock come to me for cash when on their last legs, it will be nothing to do with me if that happens and a run on the bank occurs. You also can't blame me if low interest rates cause a speculative bubble, because the treasury set BOE targets and have decided to loose control of RPI"
But instead, he's like, oh, its all under control, trust me. Maybe he isn't quite the man we are all led to believe, maybe they chose an unquestioning, company yes man. I see it happen all the time in organisations that are on the way down or don't have the will to change.
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6. jack c said...
The Rock situation is deteriorating day by day and a scapegoat is now being sought - no prizes for who it's going to be - see also www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/12/16/ccking116.xml
7. Icarus said...
King should add: "Lessons have been learned, from now on we will be closing stable doors, most banks don't act like NR but there are always a few bad Applegarths. I shall be speaking to the Chancellor and the FSA to ensure that the public is safeguarded....." (continued on page 94).
8. enuii said...
It will be interesting to see how the Bradford and Blingley fairs come the end of January as they also operate the same business model as the rock but to a different sector highly dependant on short term capital appreciation in property values.
9. paul said...
Just putting a link in for that article (I hate adding to my address bar history)
www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/12/16/ccking116.xml