The Northern Rock crisis has revealed systemic failures at Britain's financial regulator after it failed to spot the reckless behavior of the bank's directors, British lawmakers said in a report published Saturday.
The Financial Services Authority, or FSA, failed to properly supervise Northern Rock, Britain's fifth-largest mortgage lender, the Treasury select committee said.
The bank ran into trouble in September because it relied too heavily on short-term money markets instead of deposits for funding. A subsequent profit warning and appeal to the Bank of England for an emergency loan led to the first run on a British bank since 1866.
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