Chancellor defied Treasury over RBS ‘toxic loans’

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Politicians are calling for an independent valuation of the government’s asset protection scheme following controversy over publicly funded plans to insure Royal Bank of Scotland’s toxic loans.

A leaked letter from Treasury permanent secretary Nicholas Macpherson to Alistair Darling revealed that the chancellor acted against a warning from the Treasury by underwriting £282bn of RBS’s toxic loans – some of which could cover legally tainted assets.

In the letter, Macpherson warned: “It will be impossible to make the scheme work without providing insurance for some of the tainted assets – that is, assets whose legality may not be certain”.

In response to the letter, Darling asserted that “wider public interest”...

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