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Darling broke rules on bank loans

Source: Reuters - Fri 27th Nov 2009

Chancellor Alistair Darling broke guidelines by not disclosing loans of more than 60 billion pounds to Royal Bank of Scotland and Lloyds last year, a top lawmaker said on Thursday.

Edward Leigh, Conservative legislator who heads the cross-party Public Accounts Committee, said Darling went against ministerial guidelines and past practice by not telling him and the Labour chairman of the Treasury committee, John McFall, about the loans.

Darling told parliament earlier on Thursday that he had not made public some 61.6 billion pounds of emergency loans by the Bank of England to RBS and Lloyds when he approved them at the height of the credit crunch last year to avoid a repeat of 2007's run on Northern Rock's deposits.

But Leigh, whose committee scrutinises government spending, said Darling should have told him and McFall in private, in line with finance ministry guidelines.

"I am greatly disturbed that the decision was taken to by-pass the rules in this case and would appreciate a full explanation from you" Leigh said in a letter to Darling released by the Public Accounts Committee.

Leigh also questioned whether the loans, which were repaid at the start of this year, could have been made public earlier.

A senior Bank of England official involved in negotiating the loans, Executive Director Banking Andrew Bailey, said earlier on Thursday that the Bank wanted to wait until RBS and Lloyds had got longer-term funding for liabilities related to toxic assets this month before revealing the loans.

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