One of the strange things about the global economic crisis is that prescriptions for how to end it (or claims about what ended it) are flowing freely despite a lack of understanding of what was going on during the crisis.
Consider today's news dump from the Bank of England that this time last year, it was running a secret lending program to RBS and HBOS --
Use of the facilities peaked at £36.6bn for RBS (on 17 October) and at £25.4bn for HBOS (on 13 November). Total use of ELA [emergency liquidity assistance] across both banks peaked at £61.6bn on 17 October. At this point the two banks provided the Bank with collateral (residential mortgages, personal and commercial loans and UK government issued debt) with a total value in excess of £100bn. The banks were charged fees for the use of the facilities.
Although the fact that RBS and HBOS were on the brink was generally known, the scale of the assistance was not. Essentially there was a 2 month period where their only willing lender was the government -- and the Bank of England got a guarantee from the Treasury to cover potential losses.
What this means is that conclusions about the effectiveness of policies that are drawn from only publicly disclosed policies now have to be revised. Yes Gordon Brown convinced himself -- and others -- that he had saved the world through the equity injections to the banks. Now there's the little matter of how he was also lending them $100 billion and not telling anybody about it.
Incidentally, the B of E's phrasing in explaining why it kept the program secret is a Sir Humphrey classic --
In most cases, confidence can best be sustained if the Bank’s support is disclosed only when the conditions that gave rise to potentially systemic disturbance have improved to a point where the disclosure itself should not be a cause of such disturbance
In other words, we only tell you when telling you wouldn't have any impact. Trebles all round!