Bank of England boss Mervyn King blamed by city bigwig for Northern Rock collapse

Jon Wood, boss of the hedge fund SRM, said Mr King should not be given a second term as Bank of England's governor.

Scroll down for more...

He said more than $1trillion has been borrowed during the credit crunch by global banks yet none "had been named and shamed like Northern Rock".

His outburst - at a shareholder meeting - came shortly before Gordon Brown signalled that nationalisation was imminent.

The Prime Minister told ITV's News at Ten last night: "My first concern has always been the stability of the economy.

"Why we acted to help Northern Rock in the first place was to prevent contagion to other banks and other building societies and the British economy.

"And because stability is the issue we will look at every option and that includes taking the company into public ownership and then moving it later back into the private sector.

"So that is, yes, one of the options that has got to be considered."

But George Osborne indicated that the Tories would not support emergency legislation to take Northern Rock into public ownership.

The Shadow Chancellor declared: "The Labour Government's dithering for months over Northern Rock has been deeply irresponsible and has now exposed the taxpayer to a £55billion liability, more than the schools budget.

"We may be fast approaching the defining moment when the economic incompetence of Gordon Brown and Alistair Darling is brought home to the

whole country, with the first nationalisation of a high street bank.

"Nationalisation would be a major failure of policy.

"We have yet to see the detail of this desperate option, but it is difficult to see how we could support it."

Labour MPs said the Tories were influenced by donations from a hedge fund boss whose firm bought into Northern Rock and is now fighting nationalisation.

Michael Alen-Buckley, cofounder of RAB Capital, has given £100,000 to the party in two years.

Scroll down for more...

Labour MP Sion Simon said: "George Osborne must come clean because nobody will believe there is no link between him and his party, these hedge fund donors and the sudden change in his policies."

Mr Wood said the Bank of England's refusal to rescue Northern Rock in secret five months ago was disastrous.

"All Mervyn King had to do was what everybody else did," he said, implying that other central banks bail out lenders on the quiet.

He criticised the Government and the Financial Services Authority for refusing to blame the Bank of England, saying: "No one stood up and

said it was Mervyn's fault."

SRM and RAB Capital secured a partial victory yesterday in their attempt to stop a rushed sell-off of Northern Rock. The two rebel shareholders, who have a combined 18 per cent stake, were responsible for convening yesterday's extraordinary general meeting in Newcastle.

One of the four resolutions they had proposed was voted through by investors.

It means that before the Rock can issue any new shares together worth more than £5million, it must secure the approval of investors.

Philip Richards, of RAB, warned that "nationalisation will be a slow death for Northern Rock".

Scroll down for more...

Shares in the bank fell 13.25p to 69.25p yesterday on fears that the Government will step in.

John O'Hagan, 76, a small investor who attended the meeting, said: "They've been gambling with our money.

"It's okay to do that if you are a venture capitalist firm, but not with small investors.

"We used to get a decent dividend from these shares, not any more. In a way it is a pity that the Government didn't take it over at the start."