Helen Thomas is live-blogging the appearance of Northern Rock’s executives in front of the dreaded Treasury committee.
“Has no one on the board any sense of honour?”. That was the early tone of the grilling of the executives from Northern Rock by the Treasury select committee at Portcullis House, Westminster, on Tuesday.
Chairman Matt Ridley is uncomfortable. He serves at the request of the board, he says. Events surrounding the bank have been “extremely distressing” and he is “working night and day” to secure an acceptable outcome.
We’ve also learnt a new word. Ridley has said that Northern Rock was hit by an unpredictable “concatenation” of events.
Why did the bank not alter its aggressive strategy to heed the Bank of England’s warning in April that institutions could be hit by a “sharp reductions in market liquidity”, asks committee chair John McFall? They were warned and failed to react, he charges: Between April and August, they did not have a successful strategy in place.
That report, argues Ridley, did not foresee a “total shutdown of the global markets.” And the bank’s model was “transparent to the market and to regulators.”
Chief executive Adam Applegarth is singing a similar tune, arguing that from March onwards Northern Rock slowed its lending growth and announced a strategy to get riskier assets off its balance sheet. The Bank did not foresee a global liquidity freeze, he argues. “I don’t know anyone who foresaw a global freeze,” he points out.
The hearing continues…