Town hall leaders have hit back at claims that councils acted recklessly by investing in Icelandic banks. Deputy chairman of the LGA, Cllr Richard Kemp, told the communities and local government select committee that councils followed independent advice, and were the victims of unprecedented global events. He called for an independent inquiry into why the credit rating agencies continued to give Icelandic banks among the highest ratings until days before the banks went into administration. He said: 'Prudent financial management meant that councils put their money into a whole range of financial institutions to make sure any risk was spread to minimise the impact of problems in the financial markets.' Kent CC, which lost £50m, has rejected criticism raised at the committee of its treasury team. The council confirmed it was reviewing arrangements with external adviser firm, Butlers. And head of corporate services at Canterbury City Council, Jim McDonald, argued: ‘No amount of specialist skills would have protected all councils from losses. ‘The situation being dealt with is "the brink of the collapse of the global financial system", as the head of the International Monetary Fund put it.'
