CML calls on BoE to spearhead global recovery

The Council of Mortgage Lenders is urging the Bank of England to lead a global action plan to alleviate financial market turmoil.

Steven Crawshaw, chairman of the CML, made the plea last Friday at the trade body’s annual lunch at the London Hilton hotel on Park Lane.

In a rare and candid message to the BoE, Crawshaw told delegates that the central bank stands acc-used of being slow and cautious in its approach compared with the US Federal Reserve.

He called on BoE governor Mer-vyn King to coordinate action bet-ween international central banks such as the European Central Bank and the Fed.

He says: “We urge the governor to show leadership in coordinating central banks’ responses to current systemic risks. And in the UK, King must deliver on recent hints to the Treasury Committee that he is prepared to be more flexible.

“The short-term palliative is in the hands of the BoE and there is a need for broader action than we have seen to date.”

A spokesman for the BoE says: “As the governor told the Treasury Committee on March 26, we are discussing with banks how a long-term resolution of this problem might be achieved.

“It’s too soon to say where these discussions will lead and we are not commenting further on specific proposals.”

In his CML add-ress, Crawshaw re-ferred to the prob- lems lenders are facing and the strategies they are adopt- ing to cope.

He says: “Lenders are hoarding liquidity because they’re concerned about whether they will be able to access future funding. They are managing their pipelines of business cautiously.”

Crawshaw adds that lenders are not excessively worried about the immediate credit risk in the mortgage market.

He says a more pressing concern is the uncertainty about whether they will be able to access funds when they need to refinance their maturing debt commitments and the new mortgage offers they wish to make.

Crawshaw’s speech covered the various pressures in the mortgage market and revealed the extent of the slowdown the CML expects.

He says the trade body had previously predicted that net lending would fall from £108bn in 2007 to £90bn this year.

But he says because of the de-creased demand for mortgages, it is now possible that net lending in 2008 could reach only half of last year’s level unless additional funds become available.

Crawshaw also addressed regulatory issues and made a plea to the Financial Services Authority.

He says: “We are asking the FSA to regulate us in a proportionate way, although we appreciate this is difficult after supervisory failures at Northern Rock.”

He adds that the CML is frustra-ted that FSA communications are more alarming than reassuring and fail in the crucial role of boosting market confidence.