Identifier
Created
Classification
Origin
08LONDON2629
2008-10-17 16:36:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy London
Cable title:  

PARLIAMENT'S TREASURY COMMITTEE CLEARS CALENDAR FOR BANKING

Tags:  ECON EFIN UK 
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VZCZCXRO8396
RR RUEHBL RUEHED
DE RUEHLO #2629 2911636
ZNR UUUUU ZZH
R 171636Z OCT 08
FM AMEMBASSY LONDON
TO RUEHC/SECSTATE WASHDC 0113
INFO RUEHED/AMCONSUL EDINBURGH 1002
RUEHBL/AMCONSUL BELFAST 1145
RUEATRS/DEPT OF TREASURY WASHDC
RUENMEM/EU MEMBER STATES
UNCLAS LONDON 002629 

SENSITIVE

SIPDIS

E.O. 12958: N/A
TAGS: ECON EFIN UK
SUBJECT: PARLIAMENT'S TREASURY COMMITTEE CLEARS CALENDAR FOR BANKING
INQUIRY

UNCLAS LONDON 002629

SENSITIVE

SIPDIS

E.O. 12958: N/A
TAGS: ECON EFIN UK
SUBJECT: PARLIAMENT'S TREASURY COMMITTEE CLEARS CALENDAR FOR BANKING
INQUIRY


1. (SBU) On October 14, the Treasury Committee of the Parliament
announced an urgent inquiry into the banking crisis. "The inquiry
will take a fundamental look at the causes of the present banking
crisis, the current responsibilities of the banks, and the
Government to the taxpayer, and the future shape of the financial
and regulatory landscape,", said John McFall, Chairman of the
Treasury Committee. In an unprecedented move, the Committee is
asking members of the public to send in questions they would like to
see put to the heads of the Tripartite Committee, Chancellor
Darling, Bank of England Governor King, and Financial Services
Authority Chairman Turner whom the Committee has invited to appear.
Questions can be submitted to bankingcrisis@parliament.uk up to 48
hours before the hearing date. In the first three days, over 300
questions have been submitted. No date has been set for the first
evidence session that will involve the heads of the Tripartite
Committee, but a Treasury Committee source told Econoff that the
Committee is targeting November 3, subject to clearing the calendars
of the key presenters.


2. (SBU) The Treasury Committee has "cleared its fall calendar" for
the banking inquiry, according to Jay Sheth (protect),Specialist at
the Treasury Committee in a meeting with Econoffs October 17. Sheth
said the objective is to complete the inquiry before Christmas, but
that this will probably not be possible, given the amount of work
involved. Sheth envisages the inquiry will follow several tracks.
The first will examine the specific circumstances surrounding the
nationalization of Northern Rock, Bradford and Bingley, and possibly
the takeover of HBOS by Lloyds TSB. The Lloyds/HBOS transaction may
be excluded if it is not yet finalized. The second will likely
examine the remuneration of senior executives, including bonuses. A
third will consider the role of accounting standards and the
valuation of certain financial products in precipitating or
exacerbating the crisis. A fourth will consider the sustainability
of all existing and proposed government programs in light of the
current economic slowdown and the financial commitments undertaken
by the government's financial sector rescue plans. Regarding the
last element, the government will issue its pre-budget report (PBR)
before the end of the inquiry. Sheth said he expects that before
the PBR is finalized, the government will need to "tear up" the
fiscal rules that restrict its deficit spending.


3. (SBU) The inquiry will mean that no work will be done in any
other area until after the New Year, according to Sheth.
Specifically, this means that there will be no further work in
reviewing extraordinary movements in the price of oil, including any
possible role of hedge funds and commodity speculators. Recent
declines in the price of oil to below $70 per barrel have blunted
the political urgency to address this issue. The matter is not off
the committee agenda, but is decidedly on the back burner, stated
Sheth.

TUTTLE