Bank of England Governor calls for banking reform

Bank of England Governor Mervyn King has attacked the banking system, saying that retail banks should be separated from investment banks.

He said that the financial support banks had received from the Government had “created possibly the biggest moral hazard in history”.

His comments cut against the views of both UK and US governments who have privately ruled out any banking split.

Mr King said: “It is in our collective interest to reduce the dependency of so many households and businesses on so few institutions that engage in so many risky activities. The case for a serious review of how the banking industry is structured and regulated is strong.”

Mr King is concerned that not enough efforts have been made to ensure that banks won’t fail rather than be bailed out by the state if they have problems.

In the current circumstances, banks can take risks, and pocket the money if things go well; shrug their shoulders and know they’ll be handed a rescue package if things go belly up.

As a business owner and an individual I have a big problem with the banks screwing things up, getting a hand-out from Government, then refusing to lend to us, and threatening to put charges up.

We continue to pay for others’ mistakes.