Bank of England knew precisely what risk was posed by the dangerous build-up of debt which was brewing in the economy.

Telegraph
"...I came across a rather important article which I had half forgotten about. It dates from 2006, when the credit crisis was a mere apple in the financial system's eye".....
"The report completely debunks the notion that the financial crisis came as a surprise to the City, or indeed the Bank. The Government had been warned explicitly not by some crackpot economist but by its own employees in Threadneedle Street about precisely how the crisis could erupt. Not only this, but the report also revealed that its "war games" plotting out scenarios including a credit crunch revealed that a debt-fuelled crisis could cause a severe UK recession, a 25pc fall in house prices and a wiping out of a third of banks' tier one capital - around £40bn at the time. It is difficult to think how it could have made more noise about the possible risks the debt build-up entailed."
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'City faces meltdown if debt crisis hits' (2006)
"It could cause a 1.5pc contraction of the UK economy, a 25pc fall in house prices and a 35pc drop in commercial property prices over three years, according to the scenarios mapped out by the Bank. Other major countries would suffer similar effects, it says."
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