King Admits Errors by BoE During Banking Crisis
Mervyn King, governor of the Bank of England (BoE) and chairman of the Monetary Policy Committee (MPC) in the UK, has admitted that the bank should have taken a stronger interventionist approach to resolving Britain’s economic crisis.
Speaking during the 2012 BBC Today Programme Lecture in London and on Radio Four, the governor of the UK central bank stated that the UK is recovering more slowly than had been hoped from its financial problems.
Additionally, King believes the BoE did not identify the hazards facing financiers fast enough in the lead up to the global banking collapse of 2008, meaning sufficient warnings were not provided. The run on Northern Rock did not prevent the later near collapse of much bigger banking institutions in the UK, such as the Royal Bank of Scotland (RBS) and HBOS, which later had to be rescued by the taxpayer.
“We did preach sermons about the risks. But we didn’t imagine the scale of the disaster that would occur when the risks crystallised,” he noted.
King, who will leave his role in June 2013 following two full five-year terms, went on to say that the BoE should have “shouted from the rooftops” that a system where banks had borrowed too quickly and were too big to fail had been created.