Conservative leader David Cameron says he fully supports how the Bank of England and FSA have handled the Northern Rock funding crisis but is calling for greater transparency in financial markets.
Speaking at a KPMG event this week, Cameron said the immediate priority was to reassure investors about the safety of their deposits but he added that more information was needed about the chain of events that led to the Bank of England’s intervention.
Cameron said: “This is the first time that a system based on the split roles of the FSA and Bank of England has been seriously tested and we must ensure we learn whatever lessons emerge. Over the months ahead, we need answers to these questions and to take any necessary action to ensure our regulatory structure keeps step with modern financial markets.”
He also asked whether the Government should request the same capital reserves that are required for balance-sheet lending for a securitisation lender such as Northern Rock.
But Liberal Democrat Shadow Chancellor Vince Cable launched a scathing attack on the Government. He said: “The water is pouring through the defences after the near collapse of Northern Rock – a product of greed and reckless gambling by overpaid executives, lax and indulgent bank regulation and a complacent Government.”