Speaking at a lecture in London yesterday (May 2nd 2012), Sir Mervyn King said the bank was not blind to what was happening in the financial markets and it had tried to warn that the risks were being underestimated.
However, he admitted the banks could have tried harder, saying: “We did preach sermons about the risks. But we didn't imagine the scale of the disaster that would occur when the risks crystallised.
“With the benefit of hindsight, we should have shouted from the rooftops that a system had been built in which banks were too important to fail, that banks had grown too quickly and borrowed too much, and that so-called 'light-touch' regulation hadn't prevented any of this.”
Along with admitting that the Bank of England could have perhaps done more to warn about the financial risks; Sir Mervyn King also demanded that the financial system went through an urgent reforming, stressing that an overhaul which should include the separation of retail banking from “risky investment banking” was essential “to make our economy safer.”
His comments are set to add pressure on the Chancellor, George Osborne not to cave into the banking lobby and instead press ahead with planned legislation to ringfence retail banking by 2015.
For more information, please visit www.milsted-langdon.co.uk
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