The Government Failed to Warn Local Authorities and Savers About the State of Iceland’s Banks

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2008-11-03 (All day)

Commenting on reports that the British Government did know about the serious problems facing Iceland’s banks, possibly as early as the spring, Liberal Democrat Shadow Chancellor, Vince Cable, who raised this issue in Parliament yesterday, said: “It has now emerged that the British Government and the Governor of the Bank of England were involved in intensive discussions about the growing problems of Icelandic banks.”

“Indeed it now appears that the Governor of the Bank of England thought that the problems were so severe that an international rescue package would not work.

“It beggars belief that Treasury guidance to local authorities and other public bodies did not in anyway reflect the gravity of the situation, of which the Government was all too aware.

“Ministers may have been concerned about Iceland’s banks well before April, and yet there appears to have been no contingency planning for this disaster, which has cost local authorities and charities hundreds of millions of pounds, and has wiped out the savings of thousands