Chris Rexworthy, head of wholesale supervision at the FSA between 1997 and 2006, spoke out as part of a Dispatches programme aired last night on Channel 4 called ‘Crash – How the Banks Went Bust.’
During the programme economist Will Hutton outlines how the regulator intervened when market rumours about the solvency of HBOS caused its shares to plummet.
Speaking to Hutton, Rexworthy says the FSA quickly made an announcement that there was no substance to the rumours and that “HBOS remained a solvent and adequately capitalised banking institution.”
When pressed as to whether that statement was in fact the case, Rexworthy says: “It strikes me as an incredible thing for a regulator to say.
“The rumours that HBOS was in trouble had started circulating only several hours before the FSA made its statement so it’s difficult to see how much genuine and detailed analysis the FSA could have done in that period of time.”