steepholm (steepholm) wrote,
steepholm
steepholm

A Pint at the Weary Banker

There seems to have been a lot of shock in the UK that the Bank of England secretly loaned HBOS and RBS almost £62 billion pounds last year. That's understandable; but I seem to remember that when there was a run on Northern Rock back in autumn 2007, it was largely because the Bank of England had given it a "liquidity support facility" (read "loan"), and that it had had to make that public due to rules about transparency that had recently been introduced. At the time, many people complained that it would have been better had they been able to carry out such rescue operations discreetly, without causing panic among investors. According to the Daily Telegraph, for example:

"[Bank of England Governor, Mervyn] King wanted to do a covert deal, providing Northern Rock with emergency funding behind closed doors. He argued that this was the easiest way to save the Rock without spreading panic. But lawyers kept telling him that he could not do this – it would breach the EU's market abuse directive."

So, has that directive now been done away with? And, if it was a bad idea to make it public back then, why is it scandalous to keep it secret now? Colour me confused.
Tags: current affairs
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