Diary of a shambles: Bank of England’s struggle with financial crisis

Minutes show that Bank’s court failed to challenge officials’ thinking over how to handle system during crisis

Lord King called it “fun” being governor of the Bank of England during the financial crisis. There’s no such sense of enjoyment, or even job satisfaction, in the minutes of the time. As Badger (Bradford & Bingley), Fox (HBOS) and Phoenix (Royal Bank of Scotland) crashed through the undergrowth, officials struggled to keep up.

Feel the stunned realisation of what is happening in passages such as this, from 1 October 2008: “It was noted that the Bank’s exposure to Fox and Lark [Lloyds TSB] was likely to be around

The minutes that reveal how the Bank of England handled the financial crisis

Documents released following Treasury request shed light on £65bn bank bailouts for HBOS, Lloyds TSB and RBS

It was 1 October 2008. Three people had assembled inside the Bank of England. They were the then governor of the Bank, Mervyn King, and two senior members of the Bank’s governing court, Sir John Parker and Amelia Fawcett. Their task was simple: to find a way of providing financial support to Fox, the code name for HBOS. Britain’s biggest mortgage lender was in so much trouble that without help from Threadneedle Street it would default that night.

The meetings of these three, and others who sat on a specially created transactions committee (Transco), took place during the financial crisis that culminated in the taxpayer bailouts of not just HBOS but also Lloyds TSB and Royal Bank of Scotland.

Continue reading…

Shop prices fell in every month of 2014 as deflation continues

Tumbling oil prices will continue affecting shops for some time, says British Retail Consortium

Prices in UK shops fell in every month of 2014, according to an industry group that predicts tumbling oil prices will continue the deflationary pattern this year.

The British Retail Consortium’s latest figures show shop prices fell again in December on a year earlier, the 20th consecutive month of deflation.

Continue reading…