Today, BBC journalist Robert Peston sat before MPs and denied any responsibility for the start of the run on Northern Rock.
The BBC reporter's breathless exclusive of Northern Rock's application for a loan facility from the Bank of England started the media frenzy and subsequent run on the Newcastle bank. I remember the Newsnight and early morning Radio 4 Today programme where Peston was wetting himself with glee at the attention. I'd never heard the word 'unprecedented' used so much by one person. And to think the shit the Today programme got for the 'sexing up' Iraq affair.
From then on, if there was bad news in the finance industry, Peston was the man to deliver it.
There's no doubt that Northern Rock's board and executive ran a risky and ultimately unsustainable business model. Borrowing short to lend long is always going to come unstuck, especially when borrowing from the developing basket case that was the US financial sector. But while the money rolled in and share prices were healthy no-one complained.
Peston's mealy mouthed excuse that the run was exacerbated by what he claimed to be poor branch capacity and website infrastructure doesn't stand up to scrutiny. Few, if any, retail banking organisations could stand the sudden onslaught of a media driven panic that Peston wrought. I remember on the morning after that first report television journalists hanging around outside Northern Rock branches asking customers if they were worried and thinking of closing their accounts. This was wag the dog reporting in action.
Peston's evasions in the committee today suggest that he was fed the Northern Rock loan story. He's certainly not facing the possibility that his exclusive was intended to bring Northern Rock down to be picked up by another hungry bank at a bargain basement price.
There needs to be a full accounting of the whole debacle, from the lax regulation, over confident boardrooms and fickle and greedy investors, to the media panic machine fed by the likes of Peston, and the people who fed Peston his exclusive.
Peston wasn't responsible for the run, but he holds some responsibility.
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