Condemn leader call to Lib Dems

Nov 7 2007 by Paul James, The Journal

LIBERAL Democrats in Newcastle are being called on to denounce comments made by the party’s acting leader about Northern Rock.

Vince Cable, who is in charge until a new successor to Sir Menzies Campbell is appointed, has publicly spoken out against the bank in recent weeks – at the same time that the Lib Dem-controlled city council was granting the bank the Freedom of the City.

His comments included accusations that the bank was carrying out “irresponsible lending”.

Tonight the Lib Dems will be asked by the opposition Labour group to “condemn” Mr Cable’s speech made in Parliament on October 11.

A motion, put down by Labour councillor Kevin Graham, who represents the Woolsington ward, says: “Council notes the speech made in Parliament on October 11, 2007 by the Lib Dem Treasury Spokesman, Vince Cable MP, in which he not only criticised the management of Northern Rock but attacked the Government’s actions to support the bank in recent months.

“Council condemns these remarks as unhelpful to confidence in, and stability of, Northern Rock and resolves to write to Dr Cable MP asking him to apologise for them.”

Last night John Shipley, Liberal Democrat leader of the council said: “We must protect the jobs and keep the Northern Rock Foundation going for its vital, charitable and community work.

“However we do not believe that to provide this backing means that Vince Cable MP or anyone else must give uncritical support to the lending strategy of Northern Rock and actions of the government, Bank of England and Financial Services Authority.”

He said Mr Cable had criticised the regulation system as a whole and had repeatedly warned of the risks caused by the explosion in credit and unsupported lending.

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Northern’s mortgage lending falls 80% since funding crisis

NORTHERN Rock’s mortgage lending has plummeted since the bank’s funding crisis as the group seeks to slow new business, mortgage brokers said yesterday.

The group has seen mortgage lending fall by up to 80% after it was forced to turn to the Bank of England as lender of last resort, according to intermediaries. The bank, which sells the majority
of its mortgage business
through brokers, has increased interest rates and pulled more than 100 products since mid-August when the credit squeeze took hold.

Experts are now predicting
that the bank’s net mortgage lending could even slip into negative territory before the end of the year.

John Malone, managing director of Premier Mortgage Service, said: “The downturn in volume was a very much expected, predicted event.”

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Governor is optimistic

THE Governor of the Bank of England has said it could be months before the full extent of losses in the fallout from the Northern Rock crisis are revealed.

But Mervyn King said last night he was optimistic that the British banking system had “come through“.

“The British banking system has not collapsed, it has come through.

“And we will come out of this with new legislation which will give the regulators an opportunity to intervene pre-emptively – earlier than we were able to on this occasion, with better deposit insurance arrangements and with a better focus in the future on the regulation and management of liquidity.”