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Row over FSA ‘briefing media against the BoE’

MPs have demanded answers from the FSA over suggestions that the regulator briefed the media against the Bank of England over the Northern Rock fiasco.

At a Treasury select committee meeting this week, chairman John McFall confronted FSA chairman Callum McCarthy and chief executive Hector Sants with the allegation that FSA staff were the source of a critical BoE story.

McFall said he has been told by journalists that the FSA “spinners were out” but McCarthy said he did “not recognise this statement” and he would fire any staff member found guilty. McFall has written to the FSA to investigate all staff who briefed journalists in September.

McCarthy also got a mauling from McFall for refusing to answer a number of questions relating to the tripartite system of governance.

McFall said: “This is getting really, really unsatisfactory. It seems you are crawling into your den and not answering anything. We want to sort out this issue, we need to know what one of the eminent authorities thinks.”

Labour MP Sion Simon said “everyone in the room” knew the FSA had briefed against the Bank of England and branded McCarthy the “Sugar Ray Leonard of financial services” as he was a “world-class ducker and diver”.

Sants told MPs that the FSA had “lessons to be learnt” about supervisory issues such as extreme stress testing and investigating the role of cre-dit agencies and claimed practical obstacles rather than EU law were the main barrier to a covert lender of last resort facility.


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