King comes out fighting

21 September 2007

Mervyn King defended his position as governor of the Bank of England by blaming poor legislation.

He appeared in front of the Treasury Select Committee, and urged parliament to make new legislation in an effort to prevent another Northern Rock style crisis.

The governor of the central bank wanted to operate covertly with Northern Rock to keep the situation under control.

According to City AM Mr King said Northern Rock customers would have "woken up on the Monday to find themselves depositors of a larger well-capitalised bank."

Mr King claims he was constricted by four pieces of legislation regarding market and takeover rules.

"The interaction between different pieces of unconnected legislation made it almost impossible for us to act as lender of last resort in the way that we would have preferred," said Mr King.

King's job was expected to be on the line after the crisis but he gave a good a performance and explained his decisions.

Speaking to the newspaper, Ian Kernohan, economist at Royal London Asset Management, said: "King doesn’t look like a man about to resign and I think he will come out stronger from all of this."

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