Via Treasury rift with Bank deepens over secret loan – Times Online:
Relations between the Governor of the Bank of England and the Chancellor hit a new low today after Alistair Darling faced a barrage of criticism from both sides of the Commons over the emergence of a £61.6 billion secret loan to RBS and HBOS.
Mr Darling was forced to make a statement to MPs this morning to explain why the Government and the Bank of England had kept secret the loan made last year to prop up the two banks. The existence of the loan – which has since been repaid – was made public by Mervyn King yesterday as part of his testimony to the Treasury Select Committee.
It emerged yesterday that the Bank of England had provided £36.6 billion in emergency loans to RBS and £25.4 billion to HBOS last year, in addition to the £500 billion of taxpayer funds used to bail out the banking system. The Bank had been so anxious about the two banks’ ability to repay the loans, they insisted on taking assets worth £100 billion to secure the £61.6 billion credit line.
See also Secret bail-outs erode our faith in the Bank | News:
THE Bank of England is the lender of last resort for British banks. That is part of its function.
It has routinely issued banks which have temporary liquidity problems with sufficient funds to tide them over their embarrassments.
So in principle the fact that the Bank lent HBOS and RBS £61.6 billion at the height of the financial crisis, last October and November, to ensure they continued to function, was not in itself remarkable.
What is remarkable, and deserving censure, is that this guarantee is only now coming to light. The Bank’s deputy governor, Paul Tucker, told the Commons Treasury Select Committee that “this was a dire emergency”.
On the 12th January 2009 the issue was raised in the Court of Sessions, Edinburgh, of a secret dossier regarding HBOS. Counsel for Lloyds Banking Group informed the Court that the Dossier, which was prepared for the Tripartite Authority, had subsequently been destroyed.
I found it amazing at the time that a) a Dossier existed which wasn’t shown to the Lloyds share holders who voted on the merger with HBOS b) that any Dossier relating to a bank under part public ownership could be destroyed and c) that no one in Government or Opposition was not kicking up a real stink to know the contents of a Document that was so sensitive it had to be destroyed.
In light of the news of the £61.6BN to RBS and HBOS, should we be asking if that Dossier is another dark secret that we should now know about – and is it not time for complete transparency about these banks before they completely cripple the Country with their hidden truths?
Thanks for the tips, it cleared up a lot for me, and I’ll be sure to drop you a line when I have a good idea of this Banking..Thanks