No reason for keeping bank bail-out under wraps

Nov 26 2009 by Peter Jackson, The Journal

IT has been quite a week for the release of hitherto secret information. For one thing, the Iraq War Inquiry has opened and will run and run, until we are as heartily bored by that conflict as by Bloody Sunday.

Also, in what has already been dubbed Warmergate, we learnt that emails were allegedly stolen from a computer at the University of East Anglia’s Climatic Research Unit. These seem to implicate scientists in manipulating and suppressing data and in putting pressure on academic journals to dismiss editors who publish articles with which they disagree.

Putting the global warming argument on the back burner, as it were, the hackers who obtained and published these emails seem to me to have performed a valuable public service.

If these emails are what they seem to be, they reveal certain people to be ignorant of – and/or blithely contemptuous of – the standards of behaviour that rule academic and scientific research and debate, and it is hard to see how they can retain a place at any serious university.

Perhaps less clear cut is whether it was in the public interest for us to have been informed earlier about the Bank of England’s support last year for Royal Bank of Scotland and HBOS.

The Bank lent these two institutions £61.6bn in emergency funding last autumn, a sum which was underwritten by us, the taxpayers – although we didn’t know it at the time.

The loans, which have since been repaid, were necessary to prevent these bank from going under, with attendant consequences for the financial system which were too awful to contemplate.

It seems it was also decided that, in the fevered atmosphere that hung over the markets at that time, it was better for Mervyn King to keep the whole thing under his hat.

I’m not so sure. Everyone knew at the time that banks, including RBS and HBOS were in trouble, and openness on the Bank of England’s part might just have reassured the markets.

Furthermore, it was at this time that Lloyds Bank shareholders were being asked to approve a takeover of HBOS, and they can argue that this was a material fact that should have been disclosed.

The truth hurts, but so does covering it up.

:: Peter Jackson is a freelance journalist and former Journal business editor p.jackson77@btinternet.com