Northern Rock and Banking Reform

I totally agree. I thought that my right hon. Friend was intervening to say that I was never bad tempered with anyone, let alone the Governor of the Bank of England. I am deeply disappointed that he did not. [Laughter.] The real value of the Committee in the exercise came about because, as it happened, we had fixed a meeting with the authorities in September on another matter—I think it was to be with the Governor on a monthly inflation report. When the Northern Rock situation blew up, we were able to take the opportunity to raise the matter. We performed a valuable service because when three bodies are involved—in this case, the Government, the Financial Services Authority and the Bank of England—there is a tendency for them to fall out and for mistakes to be made. There is also a tendency for bureaucracy to win. Each understands that if there is a falling out and it speaks openly about what has happened, the other two will talk about what it has done. They conclude that the less they say, the better. In this case, we hit them hard, which meant that more information was put into the public arena than would normally be the case. However, the situation also underscored the problem that Select Committees have in getting people to volunteer information. My right hon. Friend the Member for Holborn and St. Pancras (Frank Dobson) made what I would describe as a lovely old Labour speech of a kind heard too rarely in the Chamber now. He put the debate in a wider perspective, which is what it needs. We are facing a threat to the economy and to people's standard of living and jobs, but not because of Northern Rock. It is interesting to see how many northern MPs are in the Chamber. The matter is now rarely mentioned in the papers, whereas until two or three weeks ago it was the staple diet of the financial pages. Northern Rock has been dealt with and dissected, but it is not the real problem. I do not wish to cross swords with such an experienced and able member of the Opposition as the right hon. Member for Hitchin and Harpenden (Mr. Lilley), but although we reached consensus in the Committee and produced a unanimous report, varying shades of opinion fed into that consensus. On reflection, I think that Northern Rock had a very hard time. Some people would say it deserved that, but it was not the culprit and the cause of all our concerns. Those concerns were caused by the bankers and the banking industry that started the securitisation. We need responsible lending. There was a lass in America—I think she was 85 or 92—who was sold a mortgage of $450,000. After a year, when she packed up her cleaning job, she defaulted. It did not need an experienced banker to know that there was no way she would repay the money, but still it was lent. The lender did that deliberately, and the debt was passed on and contributed to the contamination of the wholesale markets that paralyses them to this day. I have had the deepest respect for the right hon. Gentleman for all the years I have been here—he handled the Maxwell crisis in an unparalleled manner. However, the behaviour in the Northern Rock affair was not new for the banks. I commend to him a book called ““A Random Walk Down Wall Street””.