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Brown in financial crisis talks UK heads in financial woes talks
(about 5 hours later)
The UK's prime minister and chancellor will meet US Treasury Secretary Hank Paulson to discuss the growing turmoil in world financial markets. The UK prime minister and chancellor have met US Treasury Secretary Hank Paulson to discuss the growing turmoil in world financial markets.
The meeting comes as thousands of Northern Rock customers are queuing to withdraw funds from the stricken bank. The meeting came as thousands of Northern Rock customers were queuing to withdraw funds from the stricken bank.
Alistair Darling told BBC Radio Four's Today programme that people will still be able to get their money out of the Northern Rock if they want to. After the meeting, Chancellor Alistair Darling said that savings in the bank would be guaranteed by the government.
But the chancellor insisted that the UK economy remained strong. He added that the turmoil in financial markets were an international problem which needed tackling.
'Economy sound'
"Many banks and other financial institutions all over the world are experiencing problems," Mr Darling said.
He added that they had discussed measures they felt were necessary to improve the regulation of international markets, to encourage greater transparency, and to strengthen cross-border cooperation and communication.
The themes would be picked up at a meeting of the IMF in Washington next month, Mr Darling said.
The chancellor insisted that the UK economy remained strong and that it would weather the current storm, as it did during earlier financial crises in 1998 and 2000.
He added that the current problems were specific to the Northern Rock and that the UK banking sector was sound.
It is a product of greed and reckless gambling by overpaid executives; lax, indulgent bank regulation; and a complacent government. I warned Gordon Brown of a looming debt crisis four years ago Vincent CableLib Dem treasury spokesman Lib Dems accuse BrownIt is a product of greed and reckless gambling by overpaid executives; lax, indulgent bank regulation; and a complacent government. I warned Gordon Brown of a looming debt crisis four years ago Vincent CableLib Dem treasury spokesman Lib Dems accuse Brown
Meanwhile, Mr Paulson tried to reassure investors at a news conference in Paris before travelling to the UK. Earlier Mr Paulson tried to reassure investors at a news conference in Paris before travelling to the UK.
"There is great vigilance now on the part of regulators, in terms of staying close to markets, as we work our way through this situation," he said."There is great vigilance now on the part of regulators, in terms of staying close to markets, as we work our way through this situation," he said.
"We want to get the balance right - we don't want to rush to judgment and overreact," he added. "We want to get the balance right - we don't want to rush to judgment and overreact." Mr Paulson had tried to reassure investors that US economic growth would not be derailed by the crisis.
Earlier Mr Paulson had tried to reassure investors that US economic growth would not be derailed by the crisis.
Who's to blame?Who's to blame?
And speaking about the UK economy, Alistair Darling said it would weather the current storm, as it did during earlier financial crises in 1998 and 2000.
He said that the current problems were specific to the Northern Rock and that the UK banking sector was sound.
Alistair Darling says the problems are specific to Northern Rock
But he admitted that it had been clear since August that there was a worldwide credit crisis which originated in the US and was affecting banks across Europe.But he admitted that it had been clear since August that there was a worldwide credit crisis which originated in the US and was affecting banks across Europe.
Conservative leader David Cameron has said the government has mishandled the crisis, arguing that the chancellor's appeal for banks to lend responsibly had come too late.Conservative leader David Cameron has said the government has mishandled the crisis, arguing that the chancellor's appeal for banks to lend responsibly had come too late.
"The government has presided over a huge expansion of public and private debt without showing awareness of the risks involved," he told the Sunday Telegraph."The government has presided over a huge expansion of public and private debt without showing awareness of the risks involved," he told the Sunday Telegraph.
Liberal Democrat treasury spokesman Vincent Cable, speaking at the party's conference in Brighton, said: "The British economy may have been reasonably successful but it is also highly fallible.Liberal Democrat treasury spokesman Vincent Cable, speaking at the party's conference in Brighton, said: "The British economy may have been reasonably successful but it is also highly fallible.
"The house that Gordon Built may not be built on sand but it has certainly been built on a floodplain."The house that Gordon Built may not be built on sand but it has certainly been built on a floodplain.
"The water is now pouring through the defences after the near collapse of Northern Rock; a product of greed and reckless gambling by overpaid executives; lax, indulgent bank regulation; and a complacent government. I warned Gordon Brown of a looming debt crisis four years ago.""The water is now pouring through the defences after the near collapse of Northern Rock; a product of greed and reckless gambling by overpaid executives; lax, indulgent bank regulation; and a complacent government. I warned Gordon Brown of a looming debt crisis four years ago."
International regulation
Downing Street has played down the prospect of legislation to curtail the lending practices of banks.
Mr Darling will discuss ways to improve the international regulation of the financial sector with Mr Paulson - with the role of credit agencies, and the need to improve financial sector transparency, top of the agenda.
They may agree specific proposals to put to the annual meeting of the International Monetary Fund (IMF) in Washington next month, which has ultimate authority for regulating the international financial system.
One reason for the current crisis is that no one can be sure how much risky borrowing individual banks hold on their balance sheets.One reason for the current crisis is that no one can be sure how much risky borrowing individual banks hold on their balance sheets.
Leading international organisations have warned that the increased risk of a major slowdown in the US - the world's largest economy - could affect growth prospects for the rest of the world.Leading international organisations have warned that the increased risk of a major slowdown in the US - the world's largest economy - could affect growth prospects for the rest of the world.