Banking (S.I., 2008, No. 432)

Of course, the Bear Stearns exercise was encouraged and helped by the Federal Reserve, and I know that the hon. Gentleman would agree with me about that, but the point is that the process took place very rapidly. Let us remember the situation in which we found ourselves. There were queues of people outside the banks—it was a terrible indictment of our financial services industry. Of course, the Americans, seeing the potential for equivalent disasters in the United States, moved very quickly to ensure a private sector takeover of Bear Stearns with the support of the Federal Reserve. The point for us to consider when comparing Bear Stearns with the fiasco of Northern Rock is simply this: it is impossible to discern, because we cannot get a clear answer, what the Lloyds TSB offerings happened to be. However, we know enough to know that something could have been worked up to ensure a satisfactory takeover, but something called ““the general election”” intervened. I fear that the decision was ultimately political, and its consequences have been the dithering and backsliding of the past few months, which have had a devastating impact on the reputation of our financial services industry. The order demands assurances on transparency and good management. Northern Rock made a great impact on the reputation of our financial services industry and our regulatory oversight. The price to earnings ratio of UK domestic banks is now the lowest in Europe. The market is taking a view of us and our country, even though the financial services industry in this country is probably the most important such industry, relatively speaking, in Europe. That view flows partly from the Government's incompetence and their handling of Northern Rock. The solution had better work this time. However, I am afraid that, given the way the Government handled the issue, we can have little confidence that a Government so marked by indecision and procrastination, perfectly illustrated by the Northern Rock fiasco, will ever enjoy the fullest confidence of the banking and financial services industry in this country or internationally again.