Govt attacked over Northern Rock ‘cover-up’
Liberal Democrat acting leader Vince Cable has criticised the government for refusing to admit how much money has been lent to troubled bank Northern Rock.
Mr Cable had been seeking to ascertain the extent of taxpayers’ liability over the mortgage lender, which endured a run of depositor withdrawals in September after admitting it needed funds from the Bank of England to remain solvent.
He claimed today that an “absurd situation” had developed “where banks can take ludicrous gambles with their customers’ money”.
But prime minister Gordon Brown rejected his attacks in the Commons, insisting guaranteeing the deposits of savers was the “right thing to do”.
Mr Cable said it was wrong for the government to use “bogus” arguments about confidentiality to cover up the precise figure lent.
Chancellor Alistair Darling had written to the Lib Dem leader explaining it would not be “sensible or prudent” to reveal the details of transactions between the Bank and Northern Rock, a move criticised by Mr Cable as a “cover-up”.
“It is clear that the government is more concerned with the welfare of the managers and shareholders of Northern Rock than the security of taxpayers’ money,” he said.
“If banks are to have the benefit of the British public acting as a lender of last resort they must put an end to unsustainable lending practices.
“When things do go wrong, the boards and management must be held responsible.”
Earlier today Northern Rock secured an injunction barring the disclosure of information sent to its potential suitors. Those eyeing up Northern Rock have until Friday to declare their interest in the troubled lender.
Mr Brown backed the injunction in the Commons, saying it was “not in the interests of Northern Rock or investors to speculate on possible buyers”.
