Courage Is Needed as Mervyn Gets off Fence ; CITY COMMENT [Edition 2]
Hilton, Anthony, The Evening Standard (London, England)
Last night may well come to be seen by economic historians as the night Bank of England Governor Mervyn King finally lost patience with the banks. In a speech to scottish business organisations in Edinburgh, he ended his remarks with the blunt statement that "reform of banking is essential".
But in getting to that point, he had been even more scathing and, in a move of huge significance, appeared to come down as strongly as someone in his position could in favour of narrow banking. the enforced separation of the core banking activities on which economic life depends from the trading and gambling side of banking that has got so many of them into trouble is one of the most contentious issues in the regulatory debate. Now we know where the Governor stands. He believes there is no realistic alternative.
He is clearly as infuriated as everyone else by the way banks are rapidly reverting to type, and seem to show no appreciation or awareness of the economic sacrifice made by the nation to keep them in business.
"the sheer scale of support to the banking sector is breathtaking," King said. "In the UK, in the form of direct or guaranteed loans and equity investment, it is not far short of Pounds 1 trillion (that is Pounds 1000 billion, close to two thirds of the annual output of the entire economy). "Never in the field of financial endeavour has so much money been owed by so few to so many. and, one might add, so far with little real reform."
the banks were bailed out, of course, because they were too important to fail -- and that, King said, is inconsistent with their being in the private sector because it means bankers pay themselves fortunes in good times and leave the taxpayer with the bill when it goes wrong. "the too important to fail problem is too important …
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Publication information: Article title: Courage Is Needed as Mervyn Gets off Fence ; CITY COMMENT [Edition 2]. Contributors: Hilton, Anthony - Author. Newspaper title: The Evening Standard (London, England). Publication date: October 21, 2009. Page number: 35. © Not available. Provided by ProQuest LLC. All Rights Reserved.
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