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Bank Of England Was Unaware Of Impending Financial Crisis

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http://www.bbc.co.uk/news/business-30699476

A month before the start of the financial crisis, the Bank of England was apparently unaware of the impending danger, new documents reveal.

In a unique insight of its workings, the Bank has published minutes of top-secret meetings of the so-called Court that took place between 2007 and 2009.

The minutes show that the Bank did identify liquidity as a "central concern" in July 2007.

However no action was taken as a result.

The documents show that the Bank also used a series of code names for banks that were in trouble.

Royal Bank of Scotland (RBS) was known as "Phoenix", and Lloyds TSB as "Lark".

Following publication, Andrew Tyrie MP, the chairman of the Treasury Select Committee, was highly critical of some of the Court's non-executive directors.

He said they had failed to challenge senior executive members, like the then governor, Mervyn King, whom some accuse of failing to prioritise financial stability.

'Sense and strength'

The minutes show that in July 2007, the Court - akin to a company board - spent time discussing staff pensions, open days and new members of the Monetary Policy Committee.

Members heard that 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 9 August, 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 later, despite some turmoil in financial markets, Court members were told to have confidence 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 the 12th September, 2007.

The next day the banking crisis began in earnest.

So even though Eddie George had set the system up to fail, they want us to believe none of them were aware of it.

Well I'm convinced!

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Absolutely unbelievable.

To my mind this demonstrates the hubris of central banking. So many people were screaming from the rooftops in June 2007 that for the BoE to claim they were "unaware" means they basically decided to ignore every opinion except the one they wanted to be correct.

Mervyn King should be stripped of his knighthood and made to face the consequences of his failures in my opinion. Not that it'll ever happen.

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"The Executive believed that the events of the last month had proven the sense and strength of the tripartite framework

Yet in plublic later they were saying that the tripartate failed them, preventing stopped them having the necessary tools to prevent the scandalously high risk and debt buildiup.

Bullshitters, bluffers, liars to the very last man.

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Absolutely unbelievable.

To my mind this demonstrates the hubris of central banking. So many people were screaming from the rooftops in June 2007 that for the BoE to claim they were "unaware" means they basically decided to ignore every opinion except the one they wanted to be correct.

Mervyn King should be stripped of his knighthood and made to face the consequences of his failures in my opinion. Not that it'll ever happen.

thats because then, as now, they dont need to look out their office windows to see whats happening...they have their tools and thats what they look at.

house prices and struggling is not an issue for them..they are there to protect their charges...the banks...and they have done exceptionally well here...fact is, the price of this doing exceptionally well is everyone else pays, some get pauperised and others make a mint...but their view of the system is all is well.

Its a bit like a postman delivering letters in the blitz....he has a bag, his job is to deliver, the fact he has to climb over piles of rubble and dead householders makes no difference to his end of day review....all is well, delivered my whole bag of letters.

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Absolutely unbelievable.

To my mind this demonstrates the hubris of central banking. So many people were screaming from the rooftops in June 2007 that for the BoE to claim they were "unaware" means they basically decided to ignore every opinion except the one they wanted to be correct.

Mervyn King should be stripped of his knighthood and made to face the consequences of his failures in my opinion. Not that it'll ever happen.

x2

It made me laugh the other week when he was regaling the press with tales of the buzz he got out of the crisis

http://www.theguardian.com/business/2014/dec/29/mervyn-king-financial-crash-exciting-bank-england

'The Bank of England’s response to the global financial crisis was exciting to work on and prevented another Great Depression, its former governor, Lord King, has said.'

Methinks he speaks too soon on that one.

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Its a bit like a postman delivering letters in the blitz....he has a bag, his job is to deliver, the fact he has to climb over piles of rubble and dead householders makes no difference to his end of day review....all is well, delivered my whole bag of letters.

Nice analogy - stumbling over the carnage with eyes closed and fingers in ears, but I did my job guv.

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x2

It made me laugh the other week when he was regaling the press with tales of the buzz he got out of the crisis

http://www.theguardian.com/business/2014/dec/29/mervyn-king-financial-crash-exciting-bank-england

'The Bank of England’s response to the global financial crisis was exciting to work on and prevented another Great Depression, its former governor, Lord King, has said.'

Methinks he speaks too soon on that one.

Exactly. I'm glad he and his cronies enjoyed it, pity the other 99% of us are having a shit time as a result.

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Nice analogy - stumbling over the carnage with eyes closed and fingers in ears, but I did my job guv.

Yes, its called compartmentalisation...and allows deniable plausibility in circles of power...it is the ultimate in demarquation, so villified a practice in the working classes that a war againt the unions was waged some time ago to get rid of it.

Flexibility has yet to reach the PsTB

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Are they unaware of the london mega bubble....no hang on they can't be, I wrote and wanred them about it developing.

What's the point of the BoE except to help the bankers ?

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It is good that we pay top Dollar for this talent.

To be fair, the pre 2007 lot who claim to have missed the last bubble were paid a lot less than the post 2012 lot who are fuelling the current mega bubble.

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Truly pathetic.

What I particularly disliked was their asymmetric approach to the banks.

They looked down on the 'northern numpties', those former building societies and proceeded to refuse to extend them liquidity or decided to put them out of business rather than help them.

Such that there is virtually now no banking head offices in the north and the prospects for good quality jobs and extension of credit into local economies are much constrained.

If they had treated northern rock, Halifax, Bradford and Bingley, alliance and leicester etc etc like they treated Lloyds, Barclays, Santander, RBS, there would still be these businesses in place.

Key point was NRK, A&L, B&B not systemically important.

Barc of course refused to be bailed.

RBS = UK

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Key point was NRK, A&L, B&B not systemically important.

Barc of course refused to be bailed.

RBS = UK

Barc was bailed out by the Qataris.

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Barc was bailed out by the Qataris.

Quite. Theyre not the UK central bank or govt. as far as Im aware.

Merv won the battle with Diamond Bob in the end though.

Edited by R K

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Key point was NRK, A&L, B&B not systemically important.

Barc of course refused to be bailed.

RBS = UK

Seem to recall Richard Pym ran A&L to a high standard, all things considered. Seem to recall him grumbling a few times (2003-07) at the way other banks were able to undercut them on costs of debt/capital reserves, gobbling up too much market share, vs A&L.

Poorly run businesses feeding overreaching targets and their ever weakening credit standards, negatively affect all those trying to maintain high standards / protect members / shareholder value... unless they too decide to scrub around and throw off sound business practice in order to survive, until crash, which only followed by too many bailouts and all the claims from those at the front of it, that no one knew, no one could see the risks, and no one to blame.

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Barc was bailed out by the Qataris.

Yes but didn't Barclays lend them the money that they used to bail them out breaking banking rules.

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Indeed they pretend they're oblivious to everything on the economy - except the good evidence.

It's no way to run things.

Edited by billybong

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