Government's Attitude To Northern Rock Crisis Reeks Of Complacency - Cable

3.46.00pm BST (GMT +0100) Thu 11th Oct 2007

Commenting on Alistair Darling's statement on the Northern Rock crisis today, Liberal Democrat Shadow Chancellor and Deputy Leader, Vince Cable MP said: "The Government's attitude reeks of complacency. By using taxpayers' money to underwrite Northern Rock the Chancellor is now complicit in irresponsible lending.

"Ministers say the problem lies in turbulence in international financial markets, but savers aren't queuing through the night to rescue their savings in the US, France or Germany.

"There has been financial turbulence for most of the last century, so why is this the first time that we have seen a run on a bank since 1866?

"Northern Rock's business model, which had led to it doubling its mortgage lending in six months this year, was based on very aggressive, reckless expansion. It was an accident waiting to happen.

"While I understand that the Government had no choice but to provide a 100% guarantee to depositors to stop the run, why has the Chancellor extended the guarantee to new deposits? This merely encourages more reckless lending by the bank.

"This isn't just an embarrassment for the Government and a tragedy for Northern Rock's employees, it is a major scandal. But because we are dealing with pillars of the City establishment there is a desperate attempt to pretend that all is now well."