The Bank of England congratulated itself on its handling of market turmoil during the early stages of the financial crisis, just a day before it was called in to prop up Northern Rock, newly-disclosed documents reveal today.
They show that the Bank remained confident at the time in the now-discredited "tripartite" system of regulation, sharing responsibilities between the Bank, the Financial Services Authority (FSA) and the chancellor.
Minutes from a meeting of the Court - the Bank's oversight committee - on September 12 2007 reflected on the handling of the emerging market turmoil as credit lines seized up amid fears over US sub-prime mortgages.
The minutes said: "The executive believed that the events of the last month had proven the sense and strength of the tripartite framework.
"Tribute was paid to the many areas of the Bank that had contributed to the work undertaken during this difficult period."
By April 2008, the documents reveal, the system had been thrown into doubt, with the suggestion that the tripartite arrangement "was not sufficiently workable or relevant to managing a crisis".
Today the Bank admits that the respective roles of the three bodies in dealing with the turmoil were "ill-defined".
An earlier meeting, in July 2007, as officials worked on a new framework for identifying risks, had identified that "liquidity risk was a central concern" - that is, the seizing up of money flows that are needed to keep markets functioning.
At the September 12 meeting, the minutes recorded that the chairman of the FSA - at the time Callum McCarthy - said the problems were "ones of liquidity, not institutional insolvency" and that "the UK banking system was sound".
But the next day it emerged in a leak to the BBC that Northern Rock had called in emergency funding from the Bank of England in what directors were told in an emergency meeting was the most significant such rescue since the 1970s.
The Court had previously been kept in the dark about the move due to concerns over directors' potential conflicts of interest with their outside roles.
A year on, in 2008, the deepening crisis saw the Government forced to bail out major lenders in a move that continues to haunt the banking sector today - with the Treasury still holding 80% of RBS and more than a fifth of Lloyds.
Details of the Bank of England's handling of the credit crunch and banking crash that brought the financial system to its knees, sparking the worst recession since the war, are disclosed in minutes of Court meetings from 2007/09 published today.
The minutes disclose that the Bank feared a "domino" effect from the implosion of Northern Rock in 2007 but measures taken to revive financial markets frozen by the credit crunch at that time were to prove merely a "sticking plaster".
A year later in October 2008, RBS was also on the brink and facing a 36 billion US dollar (£24 billion) black hole when it came cap in hand to the Bank, having already tapped up the European Central Bank and US Federal Reserve.
The bank asked for a 20 billion US dollar (£13 billion) credit line - only to return two days later needing an extra 5-10 billion US dollars (£3-7 billion) to tide it over until the weekend.
Highly sensitive and short-notice decisions were taken by an emergency Bank of England sub-committee known as Transco that met 11 times during the crisis and used code words such as Phoenix for RBS and Lark for Lloyds TSB.
Other lenders were referred to as Badger (Bradford and Bingley), Fox (Halifax Bank of Scotland) and Tiger (Alliance and Leicester).
Andrew Tyrie, chairman of the Commons Treasury select committee, said the minutes showed little evidence that the Court provided effective challenge to the governor and his executive team.
Tyrie said: "The minutes show that during the crisis the Bank of England did not have a board worthy of the name."
He said they showed the need for the "radical and welcome reforms" to the Bank's structure that were announced last month.
Publishing the documents today, the Bank acknowledged that at the time of the crisis, the Court had been hampered by deficiencies including its large size and conflicts of interest of its members.
The Bank also lacked powers to take action on general risks to the economy and there was no specific body ready to step in to "resolve" failing banks with the roles of Threadneedle Street, the Treasury and the FSA during a crisis ill-defined.
Current governor Mark Carney said: "The financial crisis was a turning point in the Bank's history.
"The minutes provide further insight into the Bank's actions during this exceptional period - the policies implemented to mitigate the crisis, the lessons that were learned, and how the Bank changed as a result."