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McFall attacks Northern Rock director over lending strategy

Government advisers and northern Rock director Derek Wanless received a roasting from the treasury select committee this week, as Chairman John McFall accused him of not doing his job.

McFall said Wanless, who is chairman of the lender’s risk committee, should have alerted the Northern Rock board to the dangers of its market strategy at a time when the FSA and Bank of England were highlighting the importance of improving stress-testing.

It emerged at the meeting that all Northern Rock’s board had offered to resign, if required, as early as August 30.

Chairman Matt Ridley and chief executive Adam Applegarth also made it clear to the TSC that they were willing to resign during the bank run but said the overwhelming feeling of shareholders was they were needed in the short term to guide the bank through the crisis.

McFall grilled all Northern Rock representatives but saved his strongest words for Wanless, who recently finished his second large-scale review of the National Health Service for the Government.

He said: “I put it to you that as rival banks scaled back their lending in 2007, you accelerated yours and that decision to expand is key to this situation and you did not do your job.

“At the end of the day, your answers are unsatisfactory, you are not sure how you got in this position and you did not do your job properly … ending up in this hugely embarrassing situation causing pain to people in the North-east.”

Senior TSC member and Labour MP Jim Cousins interrupted McFall to accuse him of grandstanding.

Applegarth said there was nothing more he could have done to stop the crisis but laid blame at the Bank of England for not allowing a lender of last resort facility before the bank run, something he said could have averted problems.


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