MISTAKES made during the mishandling of the Northern Rock collapse helped ministers deal with later stages of the financial crash, former chancellor Alistair Darling has claimed.
Mr Darling was in charge of the economy at the time of the run on the Rock and admits the Government failed to handle the crisis well.
But he believes that lessons learned during the panic, which saw queues of customers withdrawing their savings from the Newcastle-based bank, helped the Treasury prevent a bigger name from going to the wall.
He said: “Our lesson from Northern Rock is we let it run for three or four days, which was far, far too long. The problem was the Government did not appear to be in control of events and it wasn’t.
“It wasn’t until the Monday evening, when I announced the formal guarantees, that we were able to stop money leaving. We were determined that we would not let it happen again, and this time we were dealing with big global players, we had no hesitation in taking the action we needed to do.”
The run on Northern Rock in September 2007 was the first on a British bank for more than 100 years and sent ripples of panic through the banking industry.
The uncertainty surrounding the bank continued for days before Mr Darling made a statement guaranteeing all savings.
Labour nationalised the bank and handed it £25bn in emergency loans.
The ongoing situation in Greece is currently adding to the uncertainty of lenders around Europe and it was made worse by credit rating agency Moody’s downgrading Spanish banks last week.