The Treasury Select Committee is set to call investment banks, ratings agencies and accountants for a new series of grillings after widening the terms of reference of its inquiry into the credit crunch.
The Chancellor, Alistair Darling, already due to face the committee of MPs on Thursday, has been marked for a second session at the end of the inquiry in January. MPs are likely to challenge him on why it took four days for decisive action to stop the run on Northern Rock's deposits.
In sessions with the Bank of England, the Financial Services Authority and Northern Rock's board, MPs have raised questions about the effectiveness of the Tripartite Arrangement which splits responsibility for financial stability between the two regulators and the Treasury. The system, introduced by Gordon Brown as Chancellor in 1997, has creaked badly under its first real test.
"The Chancellor has got to explain why he didn't intervene earlier and who was in charge," said Michael Fallon, the senior Conservative on the committee.
Before the Northern Rock crisis, committee members were already calling for investment banks and ratings agencies to face questions about how the market meltdown of August was allowed to happen. After dealing with key players in the Northern Rock affair, the MPs will broaden their investigation to the causes of the liquidity squeeze. The sessions, which will last at least until the end of the year, could see the chiefs of the FSA called back after the bruising encounter this month.
Philip Dunne, a Conservative member of the committee, said: "This could be quite a significant inquiry. I hope we will come out with positive recommendations to ensure this never happens again."
The committee last week widened the terms of its Financial Stability and Transparency inquiry to cover Northern Rock, depositor protection andthe overall functioning of financial markets.
The sessions could also see officials from some of the biggest banks in Britain and on Wall Street facing questions about the structured credit products they created to parcel up risky assets for sale to investors. Investors in these products and academic experts will also be called.
Northern Rock officials may also be called back. Within days of appearing before MPs for the first time, Matthew Ridley, Northern Rock's chairman, resigned.
Northern Rock said this weekend that Mr Ridley would not receive a pay-off following his departure.Reuse content