Bank's Governor blasts 'hubris' of the bankers he blames for credit crisis
SAM FLEMING UK Daily MailThursday, March 27, 2008
Mervyn King yesterday lashed out at the "hubris" of bankers whose greed had triggered the credit crunch and the current world financial crisis.
In an extraordinary intervention, the Bank of England Governor said turmoil in the banking system had worsened in recent weeks and that lenders would have to be more strictly regulated to prevent excessive risk-taking.
He said: "This financial crisis... arose out of the heart of the financial systems, in the main financial centres."
Mr King told the Commons Treasury Select Committee: "There are a lot of lessons to be learned.
"The conclusions inevitably tend in the direction of saying that financial institutions will have to hold more capital in the longer run and that these activities will have to be monitored much more carefully."
He said the global crisis had moved into a new phase.
Mr King said: "Across the world, confidence in financial markets is fragile. It is not that banks, at least in the UK, have made loans that are likely to result in unsustainable losses.
"The heart of the problem is not in the real economy. It is in the financial sector itself.
"There is a lot of hubris around in thinking that the expansion of financial services was a good in itself. It is not. It is a means to an end."
The governor told the MPs he will resist any calls for taxpayers to fork out more money to bail out irresponsible lenders.
SAM FLEMING UK Daily MailThursday, March 27, 2008
Mervyn King yesterday lashed out at the "hubris" of bankers whose greed had triggered the credit crunch and the current world financial crisis.
In an extraordinary intervention, the Bank of England Governor said turmoil in the banking system had worsened in recent weeks and that lenders would have to be more strictly regulated to prevent excessive risk-taking.
He said: "This financial crisis... arose out of the heart of the financial systems, in the main financial centres."
Mr King told the Commons Treasury Select Committee: "There are a lot of lessons to be learned.
"The conclusions inevitably tend in the direction of saying that financial institutions will have to hold more capital in the longer run and that these activities will have to be monitored much more carefully."
He said the global crisis had moved into a new phase.
Mr King said: "Across the world, confidence in financial markets is fragile. It is not that banks, at least in the UK, have made loans that are likely to result in unsustainable losses.
"The heart of the problem is not in the real economy. It is in the financial sector itself.
"There is a lot of hubris around in thinking that the expansion of financial services was a good in itself. It is not. It is a means to an end."
The governor told the MPs he will resist any calls for taxpayers to fork out more money to bail out irresponsible lenders.
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