A Critical Evaluation of the UK Banking Act 2009, Now Seen as the Benchmark, Post the Financial Crisis, for Dealing with Failing Banks
Posted: 15 Jan 2011 Last revised: 10 Aug 2011
Date Written: May 24, 2010
Post the collapse of Northern Rock, the failings and inadequacies of the prevalent legislative framework, governing the insolvency of banks were apparent. Mervyn King, when addressing the House of Commons highlighted that “Banks are not like other companies,” assigning to them a special status that would accordingly require a special set of laws to proficiently govern. In response to the failure of Northern Rock, a temporary, stop-gap legislative authority, the Banking (Special Provisions) Act 2008, was implemented to empower the HM Treasury, Bank of England and Financial Services Authority (FSA) to effectively deal with, and prevent where possible, the failure of any further financial institution in the U.K. The key provisions of this Act however, were subject to a sunset clause which necessitated the swift passage of a permanent and efficient banking regime. The Banking Act 2009 was the U.K. government’s response to the crisis and this paper will critically evaluate the provision of this statute to determine its status as the benchmark in dealing with failing banks.
Keywords: Banking Act 2009, Special Resolution Regime, Northern Rock, Banking (Special Provisions) Act 2008
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