Mervyn King reveals truth behind Treasury spin

Remember when Alistair Darling “announced” the £50 billion loan package to banks? That time he summoned banks to a meeting saying he wanted better fixed-rate deals and mortgage holidays “in return” for this scheme? He was talking through his hat. He has this morning been rumbled by Mervyn King, Governor of the Bank of England, who gave it straight to the Treasury Select Committee. This so-called Special Liquidity Scheme (SLS) is “a central bank scheme,” King said. The BoE, not any minister, proposed it. There are no conditions, no strings attached, no requirements for banks to ‘pass on’ Bank of England base rate. It is a facility there to provide relatively expensive emergency loans to any bank that needs it. Treasury approval was only required for technical reasons – ie issuing special Treasury bills. (Darling, remember, told MPs the SLS had been “developed following extensive discussions with the Treasury”–it was spun