BoE's King says that banks have put enormous pressure on regulators

Today's May 2013 inflation report is Bank of England governor Sir Mervyn King's last public appearance in the role before MPs. He has said that banks have put enormous pressure on regulators, saying that "at least one conversation took place that I know of".

The phenomena of regulatory capture is well known, and frequently warned about by critics of regulators as surrogate competition. While regulators may be fierce in public, they can often be captured by private interests to support them in private.

The illusion of scrutiny is provided, which provides good grounds for consumers to be more complacent. These consumers are often unaware of how limp regulators are in practice.

It should be the banks that come under pressure, not regulators. For that to occur, greater competition is necessary - requiring the elimination of implicit state backing - the problem of "Too Big To Fail" must be dealt with.