Is this really believable?

A recent National Audit Office report has uncovered hidden notes, minutes and reports which have lain undiscovered in the Treasury.

Among other things, two worries emerge:

1) We, the public have extended much more credit to the banking system than we had thought. The NAO estimates something like £850 billion. It is to be hoped that much of this will return when the banks are "back to normality", but some may well be lost. It emphasises why Brown was pushing hard for LloydsTSB to take over the failing HBOS. If there had not been a merger, the consequences could have been catastrophic, and not just for jobs in Scotland.

2) The FSA and the Treasury gave the Royal Bank of Scotland a clean bill of health in October, just days before it nearly went bust. This is amazing. It shows that the tri-partite system, which Brown wants to empower still more greatly, had broken down. In due course we may find out what the Bank of England knew and thought at the time.

As we may well survive the risk of point one, the real horror is in point two. BOS seemingly expanded loans to 50 times available bank deposits, and like Northern Rock the bank was relying on short term borrowing.

If the regulators, the Treasury and the FSA, did not know this, they were incompetent. If they did know it their inaction and good bill of health is bordering on the criminal.