Guido, did you really think Vince wasn’t way ahead of you?

by Stephen Tall on August 6, 2008

Over at Guido Fawkes’ blog, Paul Staines attack-dogs Lib Dem demi-god Vince Cable, accusing him of “naivety” in relation to the Government’s botched nationalisation of Northern Rock:

What about the naive politicians Vince, who welcomed the nationalisation, without having done any due diligence on behalf of the taxpayers?

Why didn’t Vince ask the key question, what are the taxpayers billions in loans secured against?

I guess Mr Staines isn’t an avid reader of Hansard, but as any fule kno’ it has of course been the Lib Dem shadow chancellor asking just these questions of Gordon Brown and Alasdair Darling throughout the shambolic Rock saga. Let’s take, for example, this classic statement to the Commons six months ago:

I congratulate the Chancellor on brilliant originality. The Government, through their bond guarantees, are solemnly undertaking to repay the Government. The taxpayer is standing behind the taxpayer and we have a private sector solution without private money as well as nationalisation of liabilities and losses and privatisation of profits. It requires a special sort of genius to dream up such an idea and I hope that the Government’s financial advisers have been well rewarded.

Of course, Guido could spend his time asking what the Tories’ shadow chancellor, George Osborne, has been saying should happen to Northern Rock over the last nine months – but then he’d have to discover what the Tory policies have been, first. And that would defeat even Mr Staines’ research powers.

Meanwhile, Vince has issued a typically acute and trenchant critique of the Labour government today, following the announcement that the Government is converting £3.4bn of its loan to Northern Rock into ordinary shares:

Alistair Darling assured Parliament that taxpayer loans to Northern Rock would be fully secured on mortgage assets. This is clearly not true.

“£3.4bn of the Government’s loan to Northern Rock is now being converted into ordinary shares, which rank right at the bottom for repayment. Continuing losses at the bank put this money at great risk.

“Other banks have taken the cream of Northern Rock’s mortgages, leaving the rest to curdle.

“The scale of the problems at the bank underlines the extreme negligence and irresponsibility of Northern Rock’s previous management, and highlights the scale of the failure of regulation by the FSA.

“The Government should now go after the former directors who have managed to shift the bank’s losses on to the taxpayer. Ministers must also go after the auditors who failed to spot glaring problems and mounting bad debt.

“The Chancellor and the Government were totally irresponsible for failing to heed my warnings from last October that the bank should be stopped from giving out 125% ‘together mortgages’. These shocking figures show Northern Rock has £6.3bn in unsecured loans. It was clear even then that they could never be repaid in a falling housing market.”