The Conservatives have proposed the biggest shake-up of the Bank of England since its independence over a decade ago, with a new Bank Act designed to prevent a re-run of the Northern Rock crisis, The Telegraph reports.
Slamming the Chancellor's proposal to give the Financial Services Authority extra responsibilities to help rescue stricken banks, Tory leader David Cameron said the Bank should be given these powers to intervene in future financial crises. He also urged Alistair Darling to reappoint Bank Governor Mervyn King immediately for a new term.
Mr Cameron was speaking amid growing evidence the Government is gearing up for the full-scale nationalisation of Northern Rock, as hopes of selling the bank to private-sector buyers evaporate. He said nationalisation would represent "the most complete humiliation and failure for the Government", and accused it of dithering in its immediate response to the bank run because of the possibility of a winter election.
THE GOVERNMENT WAS last night finalising contingency plans to nationalise Northern Rock after it appeared rebel shareholders in the stricken bank were close to wrecking ministers' hopes of a competitive private sale, according to The Guardian.
Ron Sandler, a senior banker and former adviser to prime minister Gordon Brown, confirmed at the weekend that he will become the boss of Northern Rock if it is taken into public ownership. Sandler, who was credited with rescuing the Lloyd's of London insurance market a decade ago, likened himself to a batsman waiting to take to the cricket field.
"My situation is that I'm in the pavilion with my pads on," he said. "Let's appreciate that I've been asked to do something in the event that the bank is taken into public ownership. I don't think you should read anything into my appointment. It's sensible contingency planning."
THE KUWAIT INVESTMENT Authority (KIA) is emerging as a linchpin in plans by Merrill Lynch and Citigroup to raise about $19bn (£9.7bn) to help shore up their balance sheets, The Times reports.
Merrill Lynch is expected to reveal further writedowns of between $10bn and $20bn tomorrow related to its exposure to sub-prime lending.
The embattled Wall Street bank, which installed John Thain as its new chief executive before Christmas, is however in talks to raise up to $4bn of fresh capital with the KIA understood to be one of the big investors in the latest consortium.
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Two global vehicles
'Further plug advice gap'
Must appoint separate CEOs and boards
Advisers do come out well
Will report to Mark Till