This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.

You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/7002128.stm

The article has changed 13 times. There is an RSS feed of changes available.

Version 2 Version 3
Northern Rock rescue criticised 'Row' over Northern Rock rescue
(20 minutes later)
The Bank of England and the Financial Services Authority were at loggerheads over the last-minute rescue of Northern Rock, according to newspaper reports.The Bank of England and the Financial Services Authority were at loggerheads over the last-minute rescue of Northern Rock, according to newspaper reports.
According to the Financial Times, FSA officials had reportedly urged the Bank to offer an emergency loan to Northern Rock weeks before the crisis.According to the Financial Times, FSA officials had reportedly urged the Bank to offer an emergency loan to Northern Rock weeks before the crisis.
But the Bank refused, citing the 'moral hazard' of a bail-out. But the Bank refused, citing the "moral hazard" of a bail-out.
On Wednesday, calm appears to have returned to financial markets, as savers returned and bank shares rose. On Wednesday, calm appeared to have returned to financial markets, as savers returned and bank shares rose.
Fingers pointedFingers pointed
Meanwhile, senior Conservative politicians have criticised the government for dragging its feet over its decision to underwrite the savings of Northern Rock deposit account holders.Meanwhile, senior Conservative politicians have criticised the government for dragging its feet over its decision to underwrite the savings of Northern Rock deposit account holders.
Former Conservative Chancellor Ken Clarke told the BBC on Tuesday: "I did not expect to see the government ever having to reassure worried savers with money guaranteed by the tax payer.Former Conservative Chancellor Ken Clarke told the BBC on Tuesday: "I did not expect to see the government ever having to reassure worried savers with money guaranteed by the tax payer.
"The response should have been clearer and quicker. It shouldn't require queues of pensioners down the High Street before the chancellor says something.""The response should have been clearer and quicker. It shouldn't require queues of pensioners down the High Street before the chancellor says something."
class="" href="either url here">History of Northern Rock href="either url here">How the government would honour its promise to Northern Rock savers Top British bankers are sickened that their industry should have been tarnished by those pictures of anxious depositors scrambling to withdraw funds BBC Business Editor Robert Peston href="http://www.bbc.co.uk/blogs/thereporters/robertpeston/">See Robert Peston's blog
Others have blamed the FSA's light regulation for fuelling a system under which banks like Northern Rock could grow rich using cheap debt.Others have blamed the FSA's light regulation for fuelling a system under which banks like Northern Rock could grow rich using cheap debt.
The Bank of England had initially refused to prop up Northern Rock's business after the Newcastle lender found it could no longer access affordable short-term loans in the money markets because of the global credit crisis.The Bank of England had initially refused to prop up Northern Rock's business after the Newcastle lender found it could no longer access affordable short-term loans in the money markets because of the global credit crisis.
The Bank's view was that a bail out would send wrong signals to the banking sector, encouraging the continuation of risky practices.The Bank's view was that a bail out would send wrong signals to the banking sector, encouraging the continuation of risky practices.
But Northern Rock executives believe that earlier action could have averted the crisis over the past few days that saw thousands of savers queuing up at branches up and down the country to withdraw their money. The bank's share price slumped by more than half in two days.But Northern Rock executives believe that earlier action could have averted the crisis over the past few days that saw thousands of savers queuing up at branches up and down the country to withdraw their money. The bank's share price slumped by more than half in two days.
Recriminations have also been levelled at the Bank of England for not doing enough to help engineer a swift sale of Northern Rock when it was clear it was headed for troubled times.Recriminations have also been levelled at the Bank of England for not doing enough to help engineer a swift sale of Northern Rock when it was clear it was headed for troubled times.
Initially, the Bank refused to extend its emergency credit facility to a potential Northern Rock suitor.Initially, the Bank refused to extend its emergency credit facility to a potential Northern Rock suitor.
But even after relaxing this stance, many believe the rate of interest at which this facility is being offered - some say about 7% - is too punitive to be attractive to a buyer.But even after relaxing this stance, many believe the rate of interest at which this facility is being offered - some say about 7% - is too punitive to be attractive to a buyer.
BBC Business Editor Robert Peston said: "Top British bankers - who met the FSA again yesterday - are sickened that their industry, the very heart of the economy, should have been tarnished by those pictures of anxious depositors scrambling to withdraw funds."
Recovery?Recovery?
On Tuesday, Northern Rock shares had recovered some ground, ending up 8%, after Chancellor Alistair Darling pledged the Bank of England would guarantee all existing deposits to "promote a stable banking system".On Tuesday, Northern Rock shares had recovered some ground, ending up 8%, after Chancellor Alistair Darling pledged the Bank of England would guarantee all existing deposits to "promote a stable banking system".
History of Northern Rock How the government would honour its promise to Northern Rock savers
The move eliminated the queues outside most Northern Rock branches and the bank said that eight out of 10 people calling the bank inquired about returning money to their account.The move eliminated the queues outside most Northern Rock branches and the bank said that eight out of 10 people calling the bank inquired about returning money to their account.
The Bank of England also announced that it would inject £4.4bn into financial markets, offering cheap credit through a so-called emergency tender at a rate of 5.75%, in an effort to shore up crumbling confidence in the UK banking system.
Northern Rock had placed full-page adverts in Tuesday's newspapers, promising deposits were "totally secure during the current instability in the financial markets" and it was open for business "as usual".Northern Rock had placed full-page adverts in Tuesday's newspapers, promising deposits were "totally secure during the current instability in the financial markets" and it was open for business "as usual".
The move came after three days of long queues at branches up and down the country as customers withdrew more than £2bn of their money - about 8% of Northern Rock's total deposits.The move came after three days of long queues at branches up and down the country as customers withdrew more than £2bn of their money - about 8% of Northern Rock's total deposits.
There were still queues at some branches on Tuesday, with some anxious savers still not placated by the government's reassurances that their savings were totally secure.
But in its home town of Newcastle, the streets around the bank were quiet.
In the north east, there has been a general sense of support for the lender, which employees about 4,500 people locally and has given donations worth about £175m to community organisations through its charitable foundation.
The former manager of Newcastle United Sir Bobby Robson said he would open an account at Northern Rock.
'Solvent business'
The Financial Services Compensation Scheme that covers banks has come under fire as a result of the crisis.
It protects 100% of the first £2,000 in any bank account and 90% of the next £33,000 - giving a maximum payout of £31,700 if a bank did go bust. FSA chief executive Hector Sants told the BBC's Radio 4 Today programme that he would be looking to improve the savers' guarantee scheme, which he said "has limitations", particularly with regard to larger deposits.
In a separate interview with the BBC, FSA chairman Callum McCarthy criticised Northern Rock's heavy reliance on short-term loans to fund its key mortgage business as "extreme".
He said the FSA required banks to "hold capital to deal with issues such as these".