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CBI's Lambert Says UK Chancellor Was Right On Northern Rock Under Circumstances

CBI's Lambert Says UK Chancellor Was Right On Northern Rock Under Circumstances
(11/27/07 11:21) (CEP News) London – The Director General of the Confederation of British Industries, Richard Lambert, told CEP News on Tuesday that UK Chancellor Alistair Darling's initial decision to intervene in the Northern Rock situation, with taxpayers' money, was the right one given the extraordinary circumstances. Speaking to CEP News after the Chancellor's speech to the CBI 2007 Annual Conference, Lambert said, "The UK chancellor was faced with a run on a bank. Failure of a banking corporation is not similar to perhaps a gradually failing manufacturing concern or a chemical plant for instance." "On September 14, when the markets and Northern Rock savers first started reacting to the news of its emergency loan from the Bank of England, the Chancellor was faced with a situation which had wider implications for the UK economy and stability of the banking sector," he added. "Given the circumstances, there was little else he (the chancellor) could do but to intervene with taxpayers' money," Lambert said. Currently, Northern Rock is thought to be holding £25 billion in loans from the BOE, with account holders' savings guaranteed by the Treasury. When asked about his speech of Sept. 26, in which he criticized the UK's tripartite system of financial regulation (which includes the BOE, Financial Services Authority and the Treasury), Lambert clarified that it should be taken in perspective. "I criticized the system and the handling of the affair but was not looking for scapegoats," he said. "I did not liken Northern Rock situation to that in a 'banana republic'. But rather that, as an industry professional, I found it inconceivable that it was happening in the UK," Lambert concluded. By Gaurav Sharma, gsharma@economicnews.ca, edited by Stephen Huebl, shuebl@economicnews. ca (END) ©CEP Newswires - ©CEP News Ltd. 2008. All Rights Reserved. www.economicnews.ca

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