FORMER chancellor Alistair Darling was so anxious about Mervyn King’s inaction during the financial crisis that he sought advice on overruling the Bank of England on use of its lending facility, he has revealed.
In an extract of his memoirs, which will be published on Wednesday, Darling writes: “The Bank was slow to recognise the nature of the crisis. If a liquidity problem remains untreated, it has a tendency to make a problem with solvency worse.”
He adds: “I was so desperate that I asked the Treasury to advise me as to whether we could order the Bank to take action.” However, he was put off by worries that it would set a bad precedent.
He claims that King’s slowness to act was evidence of “just how poor was the relationship between the Bank of England and Britain’s largest banks”.
“King had no relationship with the people he needed most to talk to: the bankers,” he writes. “The essential day-to-day contact, to feel the pulse… was just not there.”
And he accuses King of presiding over “an autocratic fiefdom of the governor, which is anachronistic”.
A spokesperson for the Bank said: “The management of the Bank is overseen by the court, the majority of whose members are non-executive.”
...Brown’s views in 2008: “No one wanted to acknowledge we were heading for an extremely serious downturn.”
...Brown’s advisers: “Their underhand tactics, particularly the continuous briefings... were difficult to bear.”
...the 2009 budget: “48 hours before its presentation, we had no budget... Gordon had always worked like this.”
...Labour’s “investment versus cuts” line: “I told [Brown] we could not continue to argue a case that did not stand up.”