AUDIT OFFICE REPORT: CULPABILITY BROWN CRASHES ON NORTHERN ROCK.

AUDIT OFFICE REPORT: CULPABILITY BROWN CRASHES ON NORTHERN ROCK.

REGULATORY FAILURES ‘MADE IN DOWNING STREET’.

A National Audit Office inquiry into the handling of Northern Rock, which finds that the tripartite regulatory structure created by Gordon Brown was seriously flawed, and that Treasury officials decided it was not a priority to fix it, has been seized on as further evidence that “culpability” for the financial crisis leads back to Downing Street.

SNP Treasury spokesperson, Stewart Hosie MP, highlighted a catalogue of failures by the prime minister in the lead up to the financial crisis, including:

- Brown ignored Treasury tripartite warnings in 2004.

- PM’s obsession with light-touch regulatory regime.

- FSA evidence PM pushed watchdogs to ignore banks risky practices.

- Key PM advisor sacked bank warning whistleblower.

- PM knew of problems with Icelandic banks months before but did nothing.

Mr Hosie said:

“Gordon Brown’s age of irresponsibility is catching up with him, and all the evidence leads back to Downing Street.

“Not only does the NAO inquiry show that the UK Government was not prepared for a financial collapse, but that they ignored the warnings as early as 2004.

“It is clearer than ever that Gordon Brown was responsible for the failed financial regulatory regime. A regime he wanted to limit and even pondered whether regulation should be in place at all.

“The evidence over who is responsible for the economic crisis, and the regulatory failures which contributed to it, all lead directly back to Downing Street. The failure of regulation was ‘made in Downing Street’ – numbers 10 and 11.

“Evidence from the FSA chairman, Lord Turner, suggested that Gordon Brown pressured City watchdogs into not questioning the banks' risky practices.

“We have also heard revelations that one of the prime ministers key advisors, Sir James Crosby, sacked a whistleblower who warned that banks were heading for disaster. That followed revelations about how Downing Street failed to take adequate action in time concerning Iceland's banks when he was given warnings months in advance.

“And if that was not enough, there are no shortage of commitments by the prime minister to put in place ‘limited regulation’, indeed, Gordon Brown even pondered whether there should be any regulation at all.

"We cannot continue with a system that allowed obvious problems to pass unnoticed. The FSAs suggestions deserve consideration and a thorough examination.”