Banking (Special Provisions) Bill

In answer to the noble Lord, Lord Forsyth, it is possible that all three reasons are required to explain why the Bill is the way it is. I do not believe in monocausal explanations for all phenomena. First, the Bill has to be like this to avoid hybridity. We do not want it to apply just to Northern Rock because that would be a time-consuming process and this is a better way to do it. Secondly, as my noble friend Lord Eatwell and I said yesterday and previously, this is an unprecedented financial crisis. Only yesterday, Credit Suisse declared that it had lost more money than anyone had expected—especially the Qatar Sovereign Wealth Fund, which had just bought into it, thinking that the market had bottomed out. The market has not bottomed out. As my noble friend Lord Eatwell also said, the whole essence of a financial crisis is the completely unexpected nature of what will happen next. I think it is prudent to insure yourself against this sort of problem. If you have had one crash, please change your probabilities and think, ““Another may happen any time soon, so let me be insured against that””. Secondly, within the next 12 months we will have the result of the consultation and the new banking reform legislation. One thing we have learnt is that it will be an extremely complex piece of legislation, because we are just learning about all the new problems created by securitisation and so forth. I do not know how long the consultation will take. Even if that takes a short time, I do not know how long the drafting will take. Therefore, it is entirely prudent to have 12 months on the face of this Bill. It is not going to cause a revolution. It is just a precautionary measure. Secondly, as my noble friend Lord Whitty said, if you are going to give banks this kind of assurance that, in case anything happens, the Government are prepared with sufficient powers to do something about it, why leave the building societies out? The Opposition argue as though the fact that the Bank of England has lender-of-last-resort powers immediately implies that the Bank of England thinks that all the financial markets are going to collapse tomorrow. Of course not. Lender-of-last-resort power is an insurance, and we need that kind of insurance in these very uncertain times.