King defended as hedge funds plot Northern Rock break-up

24 September 2007

The under-pressure Bank of England boss, Mervyn King, has received support from the Prime Minister.

Gordon Brown defended the decisions taken by Mr King during the Northern Rock crisis and describing his handling of the situation as "brilliant".

But the prime minister did not endorse King beyond his current term of office which expires in June 2008.

Mr Brown denied that the authorities has been slow to act during the crisis and told City AM: "King has been a brilliant governor of the Bank of England."

The support follows Mr King's own defence of his position after a grilling from the Treasury Select Committee last week.

Three hedge funds are reported to be plotting a break up of Northern Rock, including Chris Flowers a former Goldman Sachs banker, who was involved in the rescue of a Japanese bank several years ago.

The other firms are thought Cerberus and Citadel and the proposed deal would see the funds break up Northern Rock's mortgage books and leave shareholders with nothing.

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