Banking (Special Provisions) Bill

Part of the debate – in the House of Lords at 12:30 pm on 21st February 2008.

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Photo of Lord Davies of Oldham Lord Davies of Oldham Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords) 12:30 pm, 21st February 2008

Circumstances which the Government cannot foresee—that is the whole point and burden of my remarks. I am merely saying that the Government are prudent to have in place legislation which can be activated if a disaster occurs. If it is suggested that the Government are acting imprudently here, the Committee must be aware that every advanced economy is presently looking very closely at its banking system, the threats to it and the problems that institutions have—problems that occurred on a massive scale with a whole range of institutions. That is why the Financial Stability Forum, the international forum looking at international financial stability, is extremely active.

The British Government are playing a very important part in addressing the circumstances in which Northern Rock has proved to be vulnerable. Let me say that institutions in some other countries are even more vulnerable than Northern Rock, if one looks at the scale of the assets which have collapsed in the face of the present financial circumstances. The Government are not about creating law in order to nationalise any other institution. The Government are creating law to make it possible for that to be done if the very strict conditions of Clause 2 are met—that confidence in the financial system is threatened, the issue that Northern Rock raised, which is why we acted as we did with regard to Northern Rock.