Northern Rock – the Granite saga continues in the Commons

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The Evening Standard in London carried this report last week on the questioning of senior executives of the Financial Services Authority by the House of Commons Treasury Select Committee:

It was a killer punch from a Dumbartonshire hard man. Callum McCarthy and Hector Sants had been ducking and weaving well enough in front of the Treasury committee that is investigating Northern Rock, when the chairman caught the pair cold.

What, John McFall asked, did the Financial Services Authority think about Granite? Was not the use of a Channel Islands vehicle, a charity and a trustee company, to raise huge sums of money "a totally artificial construction?" Er, er, pass, was the gist of the reply from the pair. We'll find out and write you a letter.


What was John McFall's source of information? The Standard went on:

One Richard Murphy, a forensic accountant, has dug into the technical details of the Rock's vast financing in the money markets and unearthed an operation of bewildering complexity which appears to rest on a tiny charity. The charity, it seems, is completely ignorant of its role in high finance, and the only contribution it can find is a whip-round from Northern Rock staff in 2001.

I don't care about the publicity. When there are no more questions to be asked I'll be only too pleased to drop out of the press. But I am delighted the questions I am asking here are being used to bring people to account for what is going wrong in the financial services sector.

I look forward to the FSA's reply. It had better be good.

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