The Commons Treasury Select Committee will haul The Financial Services Authority (FSA) over the coals tomorrow, for its failure to adequately supervise Northern Rock.
The committee will question Sir Callum McCarthy, the FSA chairman, and Hector Sants, the chief executive, about Northern Rock's growth and "risky" business model.
Seemingly Northern Rock may have just saved itself from extinction, in the short term, by agreeing a £10BN loan from Citigroup. This will help fund its ongoing operations and reduce its dependency on more expensive Bank of England funds, while it continues negotiations with possible buyers.
An FSA spokesman is quoted in The Times:
"We don't object to securitisation per se. There are some benefits in terms of spreading risk, but it has to be done sensibly."
A child of ten could see that the Rock's model was hardly "sensible", the question therefore remains "was the FSA asleep at the wheel?"
Rock's shares rose to 171p this morning, as speculators gave it is some breathing room. However, a bank so heavily indebted can hardly be said to have a rosy long term future. Those who hold shares in this company are in for quite a few sleepless nights.