The British government is getting a much-needed from the country's National Audit Office. It's pissed off anyway.
The NAO concludes that "the Treasury was justified in using taxpayers' money" and that "it is difficult to imagine the scale of the consequences for the economy and society if major banks have been allowed to collapse." But it also suggests that the government's had no clue about what it was doing less than a week before it did it.
Internal papers prepared by the Treasury suggested that RBS' capital position was reasonably strong but noted that the bank was increasingly dependent on short-term wholesale funding. Less than a week later, however, the authorities unexpectedly found that RBS could no longer access the wholesale funds it needed.
Ooops. Here's a few billion pounds.
Bollocks, says the Treasury: That wasn't how we would up handing out £1 trillion in cash and guarantees at all. "The Treasury was actively preparing plans to intervene in RBS and other banks from mid-September," a month before the "specific phrase in a single file note" in question.
Report Shows U.K. Treasury Underestimated RBS Troubles [WSJ]