BANK OF ENGLAND CHOSE TO IGNOR AND GLOSS OVER RISK.

BANK OF ENGLAND CHOSE TO IGNOR AND GLOSS OVER RISK.

CULPABILITY BROWN’S TRIPARTITE SYSTEM IN MELTDOWN.

SNP Treasury Spokesperson, Stewart Hosie MP said the was “no escape” for Gordon Brown as yet more evidence piled up to suggest he is responsible for the current crisis in the banking sector.

Following admissions by Financial Services Authority (FSA) Chairman, Lord Turner, that “the whole system was risky” and “they didn’t focus enough”, Stewart Hosie has pointed to the Bank of England’s Financial Stability Report 2007 which shows the UK Government and the Bank also wilfully ignored warnings in the run up to the crisis which led to the current recession.

Commenting, Mr Hosie said:

“It wasn’t only the FSA who disregarded the fatal flaws in the banking system, the Bank of England and the London Treasury wilfully ignored their own assessments, too.

“These organisations constitute the tripartite system set up by Gordon Brown. So once again, as the failure of this regime is coming to light, there is no escape for the Prime Minister.

“The Bank of England’s 2007 Financial Stability Report, the last one before the run on Northern Rock and the full blown banking crisis, acknowledged both weaknesses and vulnerabilities including weakened credit risk assessment, impaired risk monitoring, and impaired market liquidity. But it glossed over the dangers when it said, ‘the UK financial system remains highly resilient’ and that ‘financial innovation and the growing use of credit risk transfer markets have increased the risk-bearing capacity of the system’.

“So while the Bank of England stated that its focus was on ‘assessing threats to the financial system as a whole’- something it patently failed to do - Lord Turner has conceded that the FSA failed to spot the ‘large systemic risk’ in the banking system.”

Mr Hosie’s comments came amid reports revealing the UK Government’s action plan to bail out the economy is in chaos with the CBI predicting the UK Government will have to borrow more than an additional £100bn to help the UK economy through the recession.