Governor hits out at banks

Wed Oct 21 2009 06:31:09

Bank of England Governor Mervyn King has launched an attack on the banking industry's failure to reform despite "breathtaking" levels of taxpayer support.

He has warned the public would be paying for the financial crisis "for a generation" and said there was no reason why guarantees could not be limited to traditional banking rather than casino-style trading.

Despite almost £1 trillion spent propping up banks, Mr King said last night: "To paraphrase a great wartime leader, never in the field of financial endeavour has so much money been owed by so few to so many.

"And, one might add, so far with little real reform," he added.

Mr King said the "massive support" to the global banking sector was "necessary to avert economic disaster" but warned it had created "possibly the biggest moral hazard in history".

His comments came as City firms prepare for bumper bonus payouts a year on from the near-meltdown, helped by rising stock markets and a lack of competition. A report said the City was expecting a 50 per cent rise in annual bonuses to £6 billion.

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