Chris Rexworthy, head of whole-sale supervision at the FSA between 1997 and 2006, spoke out last Mon-day in the first instalment of a two-part Dispatches programme on Channel 4 called ‘Crash – How the Banks Went Bust’
In 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 announced that there was no substance to the rumours and that “HBOS remained a solvent and adequately capitalised banking institution”.
When pressed on whether that statement had in fact been right, 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 detailed analysis it could have done in that period of time.”
The second part of the Dispatches programme airs tonight.