Darling to be quizzed over Northern Rock response

Darling to answer questions over Northern Rock

Friday, 21, Sep 2007 12:00

Alistair Darling is to be questioned by MPs over the handling of the Northern Rock crisis.

The Treasury select committee wants to know why the Bank of England and Financial Services Authority (FSA) did not intervene sooner to avert the run on the Newcastle-based bank; after it emerged problems first became apparent in August.

It has emerged the government could now introduce new legislation to combat the flaws highlighted by the crisis.

John McFall, head of the committee, confirmed MPs wish to question the chancellor, but said a date had not yet been set.

He told the Guardian he had written to the chancellor to inform him the committee plans to extend its inquiry into the stability of the UK's financial markets, amid increasing concerns of a 'credit squeeze'.

He said: "We wish to hear evidence from the government through the chancellor and the FSA through chairman Callum McCarthy, as well as from the Bank of England governor."

Sir Callum and FSA chief executive Hector Sants will also give evidence to the committee, in a pre-planned meeting this October.

Mr McFall said the committee's full terms of reference had not yet been set.

He told the BBC the committee could also interview key figures within the bank itself if it is to "dig deep" into the issue, which has seen Northern Rock lose 70 per cent of its stock market value in the past week.

Appearing before MPs yesterday, Mervyn King, governor of the Bank of England, said he was unable to handle the emerging crisis has he would have liked under the existing laws.

Addressing reports today, the prime minister's spokesman said Mr King's comments would be taken into consideration.

He said bank law was a "complex issue" and it was "right all legislation is under constant consideration".