Bank of England governor Sir Mervyn King has admitted the organisation could have done more to prevent the banking crisis and has renewed calls for reform in the troubled sector.
Speaking at The 2012 Today Programme Lecture in London last week, King claimed the Bank was not blind to what was happening in financial markets and had tried to warn that the risks were being underestimated.
He told the audience: “So why, you might ask, did the Bank not do more to prevent the disaster? We should have. But the power to regulate banks had been taken away from us in 1997. Our power was limited to publishing reports and preaching sermons.
“And we did preach sermons about the risks. But we didn’t imagine the scale of the disaster that would occur when the risks crystallised.”
King says in hindsight the Bank should have shouted from the rooftops that a system had been built in which banks were too important to fail, that they had grown too quickly and borrowed too much, and that so-called light-touch regulation hadn’t prevented any of this.