BANK OF ENGLAND (BoE) governor Mervyn King last night launched his most outspoken call yet for a regulatory revolution and a crackdown on excessive risk-taking in the City.<br /><br />In his annual Mansion House dinner speech, King called for “instruments to prevent the size, leverage, fragility and risk of the financial system from becoming too great”.<br /><br />His speech overshadowed Alistair Darling’, though the chancellor still grabbed the room’s attention when he hinted at a tax attack on the banks.<br /><br />Darling said: “Next week I will set out a new tax code for how the banks can meet their obligations.”<br /><br />King said the population’s trust in the financial sector had been lost in the recession, as families and companies suffer, while the “banking system has received financial support on an almost unimaginable scale”. <br /><br />The governor didn’t openly call for big banks to be broken up, though he warned that their liabilities had grown far too big as a share of GDP during the bubble. He aded that if institutions are “too big to fail,” then they are simply “too big”.<br /><br />In a devastating attack on Darling’s exploding budget deficit, King demanded the government explains how it will regain control of the public finances. <br /><br />Turning to the state of the economy, King said: “There are grounds for believing that the rapid falls in activity are coming to an end. But there are some equally solid reasons for believing the path to full recovery could be protracted.”<br /><br />He added: “When appropriate the MPC will raise the Bank Rate and gradually run down its portfolio of assets in a manner consistent with maintaining orderly markets”. <br /><br />Darling was singing from a different hymn sheet. He said the solution was “not as simple” as limiting banks’ sizes, adding that a system to tackle failures was needed. Darling tried to defend current and possibly future tax hikes.