LONDON (Reuters) - British journalists rejected lawmakers’ suggestions that they bore some blame for the banking crisis that has caused the government to pour tens of billions of pounds into the sector and to prop up several failed banks.
Five prominent financial editors questioned by a committee of members of parliament (MPs) on Wednesday said it was a mistake to believe that holding back news reports would have prevented the crisis, and said they had acted responsibly.
“Regulating the press will not solve the problem. This is a matter of catastrophic failure of management of risk, a failure of regulation. You should not be looking at the press as in any way responsible,” said Financial Times editor Lionel Barber.
The BBC’s business editor, Robert Peston, came under particular scrutiny for breaking the story of the failure of mortgage lender Northern Rock, the first major British casualty of the credit crunch, which was nationalized early last year.
Members of the Treasury Select Committee suggested that his reports had caused panic and that subsequent images broadcast of queues of customers besieging Northern Rock branches to withdraw their funds may have exacerbated the lender’s problems.
“Were you responsible for the run on Northern Rock?” asked Colin Breed, MP.
"I've given a lot of thought to this and the answer is 'No'," replied Peston, who has become a household name and attracted huge numbers of readers to his blog (here).
“What led to the collapse of Northern Rock was not the retail run, it was the wholesale run. It was the institutions refusing to fund this bank,” he said.
Peston declined to answer directly whether he had had particular access to government sources who may have tipped him off to Northern Rock’s troubles, but said he had been helped by talking to many people and had drawn his own conclusions.
“I have never felt that I was in receipt of preferential access or preferential information from any source at all.”
The journalists were also skeptical of the notion that they may have been pawns used by the government to manipulate the share price of banks that were subsequently nationalized.
“I absolutely don’t believe, for what it’s worth, that there was any kind of conspiracy here and that I was in a sense an instrument of manipulation,” said Peston.
Alex Brummer, city editor of the Daily Mail, said: “The moment that Lehmans failed, it was absolutely clear ... that these banks were in deep, deep trouble, that they had far too much toxic debt on their balance sheets, and the market had frozen over and they were going to need assistance.”
“That wasn’t the government creating that atmosphere, it was a reality check,” he said.
The parliamentary committee has questioned various groups including hedge funds, auditors and credit-rating agencies in an effort to build a picture of the causes of the crisis and will take evidence from bankers next week.
Reporting by Georgina Prodhan; Editing by Rupert Winchester
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