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Treasury Select Committee Chairman: BoE review 'still needed'

The Chairman of the Treasury Select Committee, Andrew Tyrie MP, said a review into the Bank of England's performance during the financial crisis is "still needed".

If the Governor thought that a review into the Bank’s performance during the crisis had been necessary, it would already have been completed. I am surprised that this was not done some time ago. Both the FSA and the Treasury have produced reports into their own performance.

The Governor suggests that such a review would be undertaken if specifically requested. The Treasury Select Committee has repeatedly called for one, whilst recognising that the best opportunity to do such work - after Lehman, the period in which the FSA produced their report - may now have passed.

The review is still needed. As the Governor himself said, it is important for us all to learn from the mistakes that have been made.

Labour MP criticises King for claiming he could not stop crash

Andy Love Credit: PA

Labour MP Andy Love, a Treasury Select Committee member, said: "This is a very unwise intervention by the Governor...He has been less than forthcoming about the Bank of England's mistakes in the run-up to the crash when it had a very clear responsibility for financial stability.

"And he is compromising his position by once again backing George Osborne's economic plan, even though we now know it has comprehensively failed and pushed Britain back into recession.

"His attempt to blame Britain's lack of growth for the last year and a half on world energy and food prices going up, rather than the Government's reckless policies, will not wash when countries like America have seen their economies grow strongly."


Tory deputy chairman blames Labour over banking crisis

Conservative Party deputy chairman Michael Fallon Credit: UPPA/Photoshot

Conservative Party deputy chairman Michael Fallon has attacked Labour over its handling of the banking crisis.

He backed up comments by Bank of England Governor, Mervyn King, that his hands had been tied, after Labour took away his power to regulate the banks in 1997.

Mr Fallon said: "Ed Balls got the big judgment wrong when he was in government, and he's got it wrong now.

He also claimed that Mervyn King was "rejecting Labour's plans for more spending, more borrowing and more debt - exactly how Ed Balls and Gordon Brown got us into this mess in the first place."

King claims he was powerless to prevent banking crisis

Bank of England Governor Mervyn King insists his hands were tied when it came to doing more, in practical terms, to avert the banking crisis.

In a radio interview, he defended the Bank's handling of the financial meltdown.

So why, you might ask, did the Bank of England not do more to prevent the disaster?

We should have, but the power to regulate banks had been taken away from us in 1997, our power was limited to that of publishing reports and preaching sermons.

And we did preach sermons about the risks. But we didn't imagine the scale of the disaster that would occur when the risks crystallised.

King defends personal failings over banking crisis

Mervyn King has emphasised that the Bank of England was not the only one caught out by the banking crisis.

In an interview with BBC Radio 4's Today programme, he says he warned of the dangers beforehand.

On all sides there was a failure of imagination to appreciate the scale of the fragilities and their potential consequences.

No one could quite bring themselves to believe that in our modern financial system the biggest banks in the world could fall over, but they did.

That isn't to say we were blind to what was going on, for several years central banks, including the Bank of England, had warned that financial markets were underestimating risks.


Former colleagues turn on bank boss

Andrew Sentance served on the Bank of England's Monetary Policy Commitee until May last year.

One of Mervyn King's former colleagues, he feels his ex boss made some mistakes.

King's admission of failure

Mervyn King says he understands depth of anger over banking crisis Credit: REUTERS/Andrew Winning

Bank of England Governor Mervyn King has said he sympathised with the widespread feeling of anger over the banking crisis.

"To many of you, this will seem deeply unfair, and it is. I can understand why so many people are angry.

"The root of the last crisis was that banks over-extended their activities... with their balance sheets increasing from around a half of national income to more than five times in a generation."

'Time to sweep Bank of England clean,' says former MPC member

David Blanchflower was a member of the Bank of England's Monetary Policy Committee between 2006 and 2009.

He rejects the idea that no one saw the financial crisis coming.

King admits Bank made mistakes

Sir Mervyn King admitted the Bank had made mistakes and should have "shouted from the rooftops" that banks had been allowed to borrow and lend too much. And it should have done more to convince the Government to recapitalise banks sooner.

There had been a "failure of imagination" to appreciate that some of the biggest banks, such as Royal Bank of Scotland and Lloyds, could need a bail-out, partly because there had been no boom or period of high inflation to suggest a crash, he claimed.

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