Local councils call for Iceland inquiry

Tuesday, 14 October 2008 5:36 PM

Local councils across Britain are calling for a government inquiry into why credit rating agencies gave Icelandic banks high ratings.

The Local Government Association (LGA), which is spearheading the plan, said the ratings were given up until a matter of days before the banks went into administrations.

The inquiry, which would be run by the Financial Services Authority (FSA), should occur at the same time as councils which continued to invest in Icelandic banks with unacceptable rating conduct their own individual inquiries, the LGA said.

One hundred and sixteen councils are known to have deposits in Icelandic banks, with deposits totalling £858.3 million.

The Liberal Democrats responded cautiously to the news.

Liberal Democrat Shadow Communities and Local Government Secretary, Julia Goldsworthy said:

While councils have a right to question whether some of the advice given by credit ratings agencies may have been flawed or inconsistent, those councils that have made poor judgements cannot put all the blame at their doors," said Lib Dem local government spokesperson Julia Goldsworthy.

Tags:
• domestic policy
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• economic policy
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• economy
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• economy and finance
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• local government
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• local government structure