The British tripartite financial supervision system in the face of the Northern Rock run
AbstractThe Northern Rock debacle - Britain's first bank run in 141 years - was the Tripartite regulatory system's first live ammunition test since its establishment in 1997. The aftermath of the crisis lists the destruction of Britain's fifth largest mortgage lender, the tarnishing of the Bank of England's well-established reputation, and the loss of confidence in the reformed regulatory system - a system that had been considered a paragon by policymakers and reformers around the world. As market observers, politicians, investors and bankers criticize not only the mortgage lender for its extreme business model - but also the Tripartite regulatory system for mishandling the crisis - it is important to piece the story together and draw lessons from it. This paper examines the Tripartite's management of the crisis and concludes that the separation between the roles of banking supervision and Lender of Last Resort, coupled by Britain's flawed deposit insurance scheme, account for the British regulatory system's mishandling of the funding shortage that escalated into a bank run.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Federal Reserve Bank of St. Louis in its series Supervisory Policy Analysis Working Papers with number 2008-01.
Date of creation: 2008
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-08-06 (All new papers)
- NEP-BAN-2008-08-06 (Banking)
- NEP-HIS-2008-08-06 (Business, Economic & Financial History)
- NEP-PKE-2008-08-06 (Post Keynesian Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dirk Schoenmaker, 1992. "Institutional Separation between Supervisory and Monetary Agencies," FMG Special Papers sp52, Financial Markets Group.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anna Xiao).
If references are entirely missing, you can add them using this form.