Alistair Darling has announced that he is going to give the Bank of England the power to keep temporary emergency loans to banks secret.
The run on Northern Rock could have been avoided if the emergency credit line the Bank of England gave it had been kept secret. It was only because of the panic caused by mis-reporting the circumstances – it wasn’t a loan to begin with, it was the promise of a loan if it was needed – that Northern Rock ended up needing billions of pounds of public money to cover the gaping hole in their finances cause by people withdrawing their savings and the share price dropping through the floor as a result.
However, Darling hasn’t done his homework because this is against EU rules. It was an EU directive that forced the Bank of England to make the credit facility public. An EU directive that the previous Bank of England governer said he would have resigned over if it was enforced whilst he was governer.