Industry dismayed by Mervyn King as Bank eyes new powers

THE banking community has reacted with “dismay” to comments by Bank of England governor Mervyn King that the industry exploits gullible borrowers and has failed to learn the lessons of the credit crisis.

“Mervyn King’s comments are extremely unhelpful,” a senior banker told City A.M. “The reaction of the business community is dismay. I don’t know what his game is. He’s making the situation significantly worse and he’s speaking irresponsibly.”

Individuals in the industry are reluctant to criticise King publicly shortly before the Bank of England receives a raft of new powers over financial institutions.

A regulatory shake-up by George Osborne will see the Financial Services Authority broken up and its powers redestributed among several bodies overseen by the central bank.

King said over the weekend that he was surprised that there is not more anger directed against bankers. “If it’s possible to make money out of gullible or unsuspecting customers, that’s perfectly acceptable (to them),” he said.

Angela Knight of the British Bankers Association said that King had failed to take account of how the industry has changed since 2008. “I sincerely hope he is as committed as we are to forming a good relationship (when the Bank gets its new powers),” she said.