What did you do in the Crisis? Lib Dems launch probe into MPs control of bank
March 23rd, 2009 | 
Author: Liberal Democrats in Burnley are launching a probe into MP Kitty Ussher’s record as the minister in charge of the country’s banking regulator, following criticism of the Government by the National Audit Office. (1, 4)
In a newly released report into the nationalisation of Northern Rock, the NAO said that Northern Rock continued to give mortgages at 125% of property values in a falling housing market after Government support was provided. It said that the Government could have stopped the high-risk lending as a condition of the bail-out. (5)
Liberal Democrat Coun Darren Reynolds said, “The government provided massive support to Northern Rock, yet still allowed Northern Rock to go on giving mortgages at 125% of property values in a crashing housing market. Why did the minister responsible for banking regulation at the time, Kitty Ussher MP, not insist that the practice stopped?”
The Lib Dems have submitted a Freedom of Information request to obtain details of the discussions that took place between Mrs Ussher and the UK’s banks as the crisis developed in 2007 and 2008.
Until being moved to her current Ministerial position at the Department of Work and Pensions Mrs Ussher was the Economic Secretary to the Treasury – dubbed “Minister for the City” – where her duties included Financial Services policy and regulation.
Whilst a Treasury minister she said that this was her dream job and told City bankers and financiers that Government decisions needed to be informed by bankers’ expertise.(2)
Coun Reynolds said, We know from information already released by the Treasury under the Freedom of Information Act that Mrs Ussher had meetings with several UK banks, twice meeting with representatives of HBOS and Barclays to discuss Financial Services issues. (3)
Mrs Ussher was the minister responsible for our banks at the time several of our banks were brought to their knees. Â With many commentators saying that it was the Government’s failure to properly regulate the banks that contributed to this crisis her constituents and the whole country deserve to know just what Mrs Ussher was doing as a Treasury minister.
Liberal Democrat Shadow Chancellor, Vince Cable said: “The NAO report is a damning account of the Treasury’s mismanagement of the Northern Rock crisis.
“The Government’s inability to stop Northern Rock issuing high risk ‘Together’ mortgages even after the bank started receiving state aid is a total disgrace.
“With billions of pounds of public money at stake, the least taxpayers should expect is that basic due diligence of the company’s loan book should have taken place before nationalisation. It seems ministers were keen to hide the scale of the bill that taxpayers were being asked to pick up.
“The fact that resolving shortcomings in the tripartite regulatory system wasn’t seen as a priority shows that Gordon Brown had his head in the sand. Ministers failed to listen to any of the warnings about the brewing storm.”
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