MPs seek answers over Northern Rock
CHANCELLOR Alistair Darling and Treasury officials will be grilled by MPs today over Northern Rock.
The Commons Treasury committee will be seeking answers over the difficulties faced by the bank in the wake of turmoil on international money markets and the Government’s response to events.
MPs will also question Mr Darling over his recent pre-budget report, which set out controversial changes to tax that have sparked anger across the business community.
The latest hearing comes after bosses at Northern Rock last week faced tough questioning from the committee.
Committee member Jim Cousins, MP for Newcastle Central, said: “The crucial thing is that the special guarantee for depositors will be extended until the future of Northern Rock is secured.
“And that may mean an overlap because Northern Rock may not stay independent. That must mean a transitional period to allow somebody to take over Northern Rock on reasonable terms.”
Banking chiefs today also warned the credit crunch is set to continue with the short-term outlook for financial stability left uncertain by recent turmoil.
In a downbeat assessment, the Bank of England said stock markets remained “vulnerable to shocks” and that a period of tighter credit conditions is expected.
In its latest financial stability report, the Bank assessedthe causes of the recent turmoil.
It stated the US sub-prime crisis exposed weaknesses within the global financial system. That led in turn to a drying up of the money markets resulting in the problems faced by the banking sector.
