ALISTAIR Darling criticised bank bosses yesterday for failing to flag up the financial difficulties they were in at an earlier stage.
The Chancellor said some had wrongly given the impression that the problems afflicting Northern Rock were isolated and would not affect themselves.
Speaking to the House of Lords Economic Affairs Committee, he said there needed to be a complete change of culture in the boardroom of financial institutions.
He also acknowledged there were “huge lessons” to be learned from the financial crisis in terms of the supervision and regulation of the banks.
Mr Darling told peers that financial institutions would have to stop offloading risk in the way they had and failing to ask enough questions about the liabilities they were taking on.
“Executives and non-executives are not just there for the ride, to charge their fees, they are there to ask serious questions and to hold the executives to account, and indeed if some of these institutions had asked more questions perhaps we might not have got into this difficulty.”
Mr Darling suggested the Financial Services Authority should have done more to identify other banks in similar difficulties to Northern Rock. “I remember, when I was dealing with these problems in 2007, asking various banks ‘have you got this problem?’ And too many of them rather gave the impression this was actually just Northern Rock, it was not something that would trouble their bank. Now we know different,” he added.