Finance minister breaks the rules
(30 November 2009 – UK) Undisclosed loans made to Royal Bank of Scotland (RBS) and Lloyds of over £60 billion (A$109 billion) have landed the British finance minister in hot water.
The cross-party Public Accounts Committee head and opposition Conservative legislator, Edward Leigh, said that the British finance minister, Alistair Darling, went against ministerial guidelines and past practice by not telling Mr Leigh and the Labour chairman of the Treasury committee, John McFall, about the loans.
Mr Darling revealed that the reason he had not made the emergency loans, approved at the height of the global financial crisis, of £61.6 billion public was in an effort to curb a repeat of the 2007 run on Northern Rock’s deposits.
However, Mr Leigh said that despite this Mr Darling should have discussed the approval with Mr McFall and himself in private, keeping in line with ministry guidelines.
Mr Leigh, whose committee watches government spending, said in a letter to Mr Darling that was released to the Public Accounts Committee that he is greatly disturbed that the decision was taken to by-pass the rules in this case and would require a full explanation from Mr Darling.
The Bank of England said, when releasing details of the loans, that it believed the loans no longer needed to remain a secret because there was no longer a ‘potentially systemic disturbance’ to the financial system.
Mr Leigh also questioned whether the loans, which were repaid at the start of this year, could have been made public earlier.
Andrew Bailey, executive director of banking, BoE, said that the central bank wanted to wait until both RBS and Lloyds had got longer-term funding for liabilities related to toxic assets this month before revealing the loans.
Mr Darling revealed that the reason he had not made the emergency loans, approved at the height of the global financial crisis, of £61.6 billion public was in an effort to curb a repeat of the 2007 run on Northern Rock’s deposits.
However, Mr Leigh said that despite this Mr Darling should have discussed the approval with Mr McFall and himself in private, keeping in line with ministry guidelines.
Mr Leigh, whose committee watches government spending, said in a letter to Mr Darling that was released to the Public Accounts Committee that he is greatly disturbed that the decision was taken to by-pass the rules in this case and would require a full explanation from Mr Darling.
The Bank of England said, when releasing details of the loans, that it believed the loans no longer needed to remain a secret because there was no longer a ‘potentially systemic disturbance’ to the financial system.
Mr Leigh also questioned whether the loans, which were repaid at the start of this year, could have been made public earlier.
Andrew Bailey, executive director of banking, BoE, said that the central bank wanted to wait until both RBS and Lloyds had got longer-term funding for liabilities related to toxic assets this month before revealing the loans.
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