BoE governor hits out at banks failure to reform
21 Oct 2009
Bank of England governor Mervyn King launched a scathing attack on the banking industry's failure to reform saying that the scale of support to the banking sector is breathtaking.
In a speech to Scottish business organisations in Edinburgh, King said, "To paraphrase a great wartime leader, 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 governor warned the public would be paying for the financial crisis "for a generation" and said there was no reason why guarantees could not be limited to traditional banking rather than casino-style trading.
Despite almost £1 trillion spent propping up banks, King said the "massive support" to the global banking sector was "necessary to avert economic disaster" but warned it had created "possibly the biggest moral hazard in history".
Banks have been criticised for making risky investments - which in previous years had brought hefty profits and large bonuses for their staff.
''Reforming UK banking through regulation is not enough and a fundamental rethink of how banks are structured is needed,'' the BoE governor said.
