Authorities criticised for failing to spot financial crisis

| May 1, 2009 | 0 Comments
”Authorities

In its second report on the financial crisis, the Treasury Select Committee has blasted authorities for failing to spot the magnitude of the crisis and for their current management of overseeing banks.

Chairman of the Committee, John McFall, said “Bankers have made an astonishing mess of the financial system.”

The Committee said the effects of the crisis will be felt for decades to come.

Furthermore, current lending policies have been criticised after the Committee criticised banks for increasing their charges and fees to small business borrowers.

The MPs said there was “an unresolved inconsistency between… bankers’ assurances that they are increasing their lending and, on the other hand, the widespread complaints of business that credit is difficult to obtain and increasingly expensive”.

In the six months to February 2008, bank lending to business fell from £53.5 billion to £8.5 billion in the same period to February 2009.

However, the group has supported attempts made by the Government to bailout banks and strengthen the banking system.

However, MPs have said that details of the bank investments being guaranteed under the Government’s Asset Protection Scheme, recently introduced, should be divulged with the public being told what the assets are, how much they are worth and how much value they might eventually lose.

Finally, the Financial Services Compensation Scheme (FSCS) was praised by the Committee, who said the scheme had developed a number of “innovative solutions” to deal with the collapse of banks in the UK.

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