Minutes of top-level discussions at the Bank of England in the run-up to the financial crisis of 2007 make for interesting and rather embarrassing reading.
The crisis that overwhelmed Northern Rock and other financial institutions seems to have been as much of a surprise to the Old Lady of Threadneedle Street as it was to the rest of us.
The crisis finished Northern Rock while other banks survived. A senior source at the Rock says those other banks were given greater protection as the Bank of England desperately tried to shore them up. This would appear to be true.
However, the Rock was the first British bank to be caught up in the crisis. The Bank of England was not forewarned nor forearmed in the way it was for the likes of the Royal Bank of Scotland and HBOS.
Secondly, the Rock crashed because of the irresponsible lending practices it pursued at the time. The Bank of England’s mistakes were surely secondary to the Rock’s.