Did UK press play a role in banking crisis?

An influential group of British lawmakers will quiz leading financial journalists on Wednesday about whether they held any responsibility in the banking crisis for the way they reported events.

The Treasury Select Committee will be taking evidence from key figures in the news media, including Robert Peston, the BBC’s business editor, who broke several stories when the financial crisis was most acute—including the news that Lloyds TSB was to take over troubled HBOS, which caused a sharp rise in the HBOS share price.

The year before, Peston broke the news that Northern Rock had agreed an emergency loan from the Bank of England to keep it afloat as the money markets dried up.

The following morning, customers lined up outside Northern Rock branches around Britain, prompting suggestions by a few fellow journalists and some Northern Rock shareholders that he was partly responsible for the first run on a British bank for around 150 years.

In a recent edition of the BBC’s current affairs programme Panorama, Peston said he was shocked by the run on Northern Rock, which eventually led to its full-scale nationalisation.

On the same programme, Simon Jenkins, a columnist at the Guardian newspaper, said financial journalists should be more aware of how their coverage can affect sentiment. Jenkins was due to testify before the committee as well.

The committee has said it would consider whether financial journalists should exercise greater restraint during times of market turbulence and whether any kind of reporting restrictions should be applied during such periods.

In addition, it said it would investigate whether enough journalists have sufficient expertise in financial issues and examine the role of the financial media in alerting the authorities to issues of public concern.

Other journalists set to join the discussion are Financial Times editor Lionel Barber and Alex Brummer, the financial editor of the Daily Mail, which ran a profile of Peston in October headlined: “Does this man have too much power?”

Jeff Randall, the BBC’s former business editor and a presenter now on Sky News, will also appear before the lawmakers.

The hearing is part of the committee’s wider investigation into the banking crisis. Last week, leading hedge fund managers were hauled in front of the committee.

Next week, some of the leading executives in the banking industry, including Fred Goodwin, the former chief executive of Royal Bank of Scotland Group PLC, will be grilled by the committee.—Sapa-AP

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