Britain risks suffering another financial crisis without reform of the country’s banks, the Governor of the Bank of England warns today.
In an interview with The Daily Telegraph, Mervyn King says that “imbalances” in the banking system remain and are “beginning to grow again”.
Mr King urges high street banks to take a better, longer term view towards their customers and to stop focusing on the need to “simply maximise profits next week”.
He accuses them of routinely exploiting their millions of customers. “If it’s possible [for financial services firms] to make money out of gullible or unsuspecting customers, particularly institutional customers, [they think] that is perfectly acceptable,” he says.
The Governor criticises the “weight put on the importance and value of takeovers” and raises concerns that companies with good reputations have been “destroyed” in the search for short-term profits.
Mr King expresses regret for not sounding a louder warning over his concerns before the last banking crisis.
The Governor’s remarks are a warning to George Osborne, the Chancellor, as a government commission considers whether to force high street banks to sell off their investment banking arms.
Mr Osborne is thought to be against such a plan, but Mr King is due to ultimately become responsible for banking regulation and his views are, therefore, critical.
In the interview, the Bank Governor says: “We allowed a [banking] system to build up which contained the seeds of its own destruction."
“We’ve not yet solved the 'too big to fail’ or, as I prefer to call it, the 'too important to fail’ problem."
“The concept of being too important to fail should have no place in a market economy.”
When asked whether there could be a repeat of the financial crisis, Mr King says: “Yes. The problem is still there. The search for yield goes on. Imbalances are beginning to grow again.”
Continue reading - Britain at risk of another financial crisis, Bank of England chief warns
No comments:
Post a Comment