The answer, as with Johnson Matthey Bankers nine years ago, was that the Bank supervisors spied risks that the sinking craft would hole larger vessels below the waterline. This is something the supervisors label a systemic risk - a risk to the whole system.
The Bank says there were 40 other banks at risk, and the resulting wreckage could have damaged the flagships of the banking system at a time when property losses were soaring and foreign banks were withdrawing deposits because of problems at home.
The six banks in sinking condition were losing deposits hand over fist because of nervousness in the money markets. Those deposits were largely from people able to look after themselves, such as other banks, companies and local authorities, rather than high street savers.
Indeed, a paradox is that the liferaft put a higher priority on rescuing banks with mainly commercial deposits than those that rely on small savers. Several small retail banks have been allowed to go under recently.
This looks unfair, but there is a practical reason. Retail deposits tend to be stable compared with commercial money that can vanish overnight. It is in the money markets that a threat to one bank can become a threat to another and thence to the whole system, and that is what pushes the panic button at the Bank of England.
But the Bank has to justify saving the deposits of professionals whom most people would regard as less worthy of help than, for example, Swan Hunter.
In the end, the justification depends on the risk having been so great that there would indeed have been a systemic collapse hurting far more people.
Given the depth of the recession and the frightening property provisions that were leading to rumours about even large banks, the Bank must get the benefit of the doubt. But the Treasury select committee should make it sweat.Reuse content