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McCarthy and Sants to face MPs’ questions

The FSA and Treasury are to be hauled in front of the Treasury select committee to explain their role in the Northern Rock fiasco as MPs turn up the heat on the regulator.

FSA chairman Callum McCarthy and chief executive Hector Sants will appear in front of the committee on October 9, with MPs expected to take Treasury evidence at a later date.

The committee originally planned to take evidence from McCarthy and Sants on October 9 as part of the annual scrutiny of the FSA’s report and the session may include questions relating to the wider work of the regulator.

At last week’s grilling of Bank of England governor Mervyn King, committee vice-chairman and Tory MP Michael Fallon attacked the FSA’s handling of the affair.

After the session, Fallon said McCarthy now has arguido status, referring to the Portuguese police’s use of official suspect status in the Madeleine McCann case.

In a speech at the Mansion House last week, McCarthy said events of the previous week had been “sobering” and the FSA needs to reflect and then act to prevent a repeat.

McCarthy said: “I am conscious that those who queued last weekend will have questions about what happened and why, which need to be answered.”

He said long-standing components of current arrangements need to be re-examined, such as the compensation scheme arrangements for depositors.

He stressed the current problems of liquidity and confidence are set against an economic background which remains benign and current events have moved the industry from one abnormal state of affairs – too little risk aversion – to another abnormal state – too much risk aversion.


Keep calm after the storm

Apologies for the crass use of a classic REM song but It’s The End Of The World As We Know It (And I Feel Fine) sums up the situation at present. If the prophets of doom are to be believed, in a month’s time, the market will be in meltdown and some major lenders will be no more.


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