The Rock hit by "completely unpredicted" chain of events
Oct 16 2007 By Andrew Mernin
THE BOSS of Newcastle-based Northern Rock has claimed that it was hit by a "completely unpredicted" chain of events.
Appearing before the Commons Treasury Committee, chairman Matt Ridley insisted that the global credit crunch which led to last month’s bank run could not have been foreseen.
But he faced accusations from angry MPs of making "basic banking errors" and of "clinging to office" after the bank was forced to turn to the Bank of England for emergency funding.
Dr Ridley said the bank had sought to diversify its sources of funding and that it could not have predicted the world-wide closing of credit markets after the collapse of the US "sub-prime" mortgage market.
He said: "The idea that all markets would close simultaneously was unforeseen by any major authority. We were hit by an unexpected and unpredictable concatenation of events."
That drew a scathing response from Tory MP Michael Fallon, who demanded to know why he had not resigned.
"You are the chairman of the bank that ran out of money, that caused the first bank run in this country for 150 years. You have had to borrow billions of public money from the Bank of England. You have damaged the good name of British banking. Why are you still clinging to office?" he asked.
Dr Ridley said he was working "night and day" to turn around the situation at the bank.
"I serve at the behest of the board, and if they think that they can do better by asking for my resignation, it will be available to them," he said.
