The Bank of England's senior executives were guilty of "groupthink" and complacency in the run-up to the country's credit crisis in 2007, and even in the months after a leading retail mortgage lender was rescued, newly released documents have shown.
The minutes of monthly meetings between June 2007-09 of the Bank of England's board – or Court – which included some of the best-known figures in U.K. business as its non-executive directors, have just been made public following after a disclosure campaign.
They show what has been described as a general failure to grasp the danger facing the U.K. banking system in the run-up to the global financial crisis and demonstrate what prominent U.K. lawmaker, and chairman of the House of Commons' Treasury Committee, Andrew Tyrie describes as "very little sign…of any differences of view."
The minutes show that at the time of the Bank's rescue of mortgage lender Northern Rock, the then Governor Mervyn King stressed the risk of "moral hazard" – allowing banks to think they are free to take risks as the state would always be there to help them -- over the potential damage to the financial system, to very little challenge. By not stepping in and reining in the banks' high-risk activities then, this view of King's has since been credited with failing to halt the contagion in the financial system during the financial crisis.