Northern Rock and Banking Reform

That certainly would help the debate, but the Treasury Committee does not have inside information. All of us on the Committee have realised that if we overstretch ourselves, we can make fools of ourselves. We have not overstretched ourselves; therefore our report has been well received. I do not want to get into crystal ball gazing; what I am asking is for the Ministers on the Front Bench to fill in the blanks and to fill them in soon. Then we can have a decent debate on the issue. To get back to my point about the overlap, some might say, ““This is going against the efficiency in regulation over recent times,”” but perhaps there is a push back from that. I remember being most impressed during my visit to Washington by the role of the Federal Reserve. There is overlap in regulation there, and we would not want to replicate that in this country. However, once the Federal Reserve has its eyes on something, people perk up and start to listen. One of the tragedies of the situation is that both the FSA and the Bank of England sent out messages to the financial community with their financial stability reports about possible problems in liquidity, but nobody took them on, because there was no mechanism for feedback. In our latter report on financial stability and transparency, the Committee said that those warnings needed to heeded at board level and that a message needed to go back to the FSA or the Bank from the board level saying, ““We have looked at the situation.”” So I hope that that step is taken rather quickly. On the efficiency in the market, perhaps we have been overwhelmed by the benign economic conditions and there has been too much complacency in financial institutions to prepare for the bad times, as well as the good times, and the war games and other aspects relate to that. The Government have also said that the Bank of England will have a statutory responsibility, and the Government reforms call for the Bank to have that for reasons of financial stability. I suggest to the Government that that is all well and good, but what instruments are at their disposal to meet that statutory responsibility? We need to fill in the individual responsibilities of the authorities, so that they stick to their mandates and so that, with the special resolution regime, we do not get into situations such as the one that we got into with Northern Rock. All that needs to be filled in, because future Treasury Committees could face problems in the financial markets and ask future Governors of the Bank of England why they did not fulfil their duty to protect financial stability, and I do not want them to be told, ““Well, it's because Parliament did not give us adequate powers to achieve it, and the FSA did not listen to us when we asked for action.”” That is what the recommendations of our Committee are about. This unanimous report has been well received, and it has cross-party support. The Treasury Committee was the first to the line when the crisis blew up. We have engaged the public in providing a detailed understanding of what went on, and I should like to find from today's debate that that detailed understanding is translated into a detailed prescription, so that we never again have a run on a bank, as we had with Northern Rock.