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Confidence in banks down one year after Rock crisis

Britain’s reputation for financial stability has been seriously undermined and trust in the financial system will take decades to regain, says a leading financial history expert one year on from the Northern Rock crisis.

Professor Ranald Michie from Durham University, who himself lost a significant amount of money as a shareholder, says all previous crises since the First World War were defused by the Bank of England up until last year.

Saturday 13 September marks the first anniversary of the BBC revealing that Northern Rock had asked the Bank of England for emergency financial support.

Professor Michie, who is a leading expert on the history of securities markets and stock exchanges, suggests that Britain’s financial bodies need to review their monitoring systems and build up the public’s confidence in banking which, one year on, is still at an all-time low.

Professor Michie said: “There were no bank collapses in Britain in the 1930s despite the worldwide financial turmoil that took place in that decade. There was a secondary bank crisis of 1974 but none resulted in bank runs in Britain.

“Up until last year, the Bank of England had learnt from its previous mistakes and avoided making them again.

“The oversight over the financial system by the Treasury, Bank of England and the Financial Services Authority and their large staff should have made it impossible for a crisis to get out of control the way it did.”

Professor Michie believes that until this time last year, “the possibility of a bank run in Britain seemed as out of date as steam trains and the Empire.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .