Calls mount for probe into the Bank of England’s role in crisis
INFLUENTIAL MP Andrew Tyrie called for an inquiry into the Bank of England’s actions in the financial crisis yesterday, after Mervyn King claimed he saw bank problems building but was powerless to act.
After years of refusing to hold an inquiry, Bank governor King yesterday suggested he would drop his opposition if one was proposed.
Meanwhile some economists rejected the governor’s “narrow and partial” analysis of the crisis, claiming his explanation ignored much of the problem and that his planned solution would not correctly reform the sector.
An investigation into what went wrong at the Bank of England is still important, said Treasury Select Committee chairman Tyrie, but comes too late to impact on the Bank’s new regulatory structure.
“As the governor himself said, it is important for us all to learn from the mistakes that have been made,” Tyrie said yesterday. “The Bank is taking on considerable new powers in the Financial Services Bill, currently before parliament. Yet we still do not have firm and agreed conclusions about the mistakes that were made and which the legislation is, presumably, seeking to address.”
Citi economist Michael Saunders also hit out at King’s claim that “this was a bust without a boom”, as well as his suggested solutions. “His explanation of the causes of the crisis – and hence of the lessons to be learnt – is too narrow and partial,” said Saunders, who believes there was a credit boom. King said that he had seen the crisis coming, but that his warnings went unheeded.