King a ‘disaster’ as Bank Governor, says Standard Life
Sir Mervyn King has been a “disaster” as Governor of the Bank of England, one of the country’s top fund managers has declared.
By Philip Aldrick, Economics Editor
3:47PM BST 30 Apr 2012
David Cumming, head of equities at Standard Life and one of the most influential figures in the City, said the Treasury must improve on Sir Mervyn when his second term expires in June 2013. The Chancellor has said the appointment process will officially begin in the autumn and a successor named before the end of the year.
Sir Mervyn has not ingratiated himself with the City since the financial crisis – at one point even expressing surprise that the public was not more angry with bankers. However, despite the underlying animosity, senior finance professionals have rarely spoken out so strongly against the Governor.
Mr Cumming said: “The current appointment in my view has been a disaster, so its important to get a better man this time round.”
Mr Cumming did not expand on his position, but City figures are known to be frustrated with the Governor’s apparently conflicting demands for lenders to boost their capital buffers and increase lending at the same time. Futhermore, they find his sermons about bankings’ ills grating given his regulatory failings before the crisis.
“He was happy to let them run at 150 miles an hour. Now he wants them running at 10 miles an hour and armour plated,” said one senior City figure. “He’s gone from very light touch to excessive regulation. That’s making it difficult for banks to lend, which is bad for them and the economy.”
Sir Mervyn has faced criticism for letting Britain’s banks grow so unstable in the boom. He slashed back financial regulation at the Bank after becoming Governor in 2003 and was slow to respond once the credit crunch struck. Some, such as Standard Chartered chief executive Peter Sands, see the current over-reaction as an equally bad mistake.
The Financial Services Authority (FSA) has admitted to its failings in damning internal reports into Royal Bank of Scotland and Northern Rock, but the Bank has so far refused to expose itself to public scrutiny.
“He didn’t do his job to protect the system,” the City director said. “But there’s been no hint of contrition.”
Mr Cumming did not express much confidence in the candidates most likely to succeed Sir Mervyn in what will be the most powerful unelected role in the UK. “One of the problems of this post it requires contrasting areas of expertise in regulation and economics,” Mr Cumming said. “There are a lot of names in the frame, none at the moment appeal.”
Paul Tucker, the Bank’s deputy Governor, is the front-runner, alongside FSA chairman Lord Turner and former Cabinet Secretary Lord O’Donnell. John Varley, the former Barclays chief executive, is said to the be the City’s favourite.
Jim O’Neill, the respected chairman of Goldman Sachs Asset Management, has emerged as a potential candidate. Mr Cumming said: “He comes across as a pragmatic economist but doesn’t have any experience of regulation.”
The Bank has argued the new regulatory framework that will give it over-arching powers is a response to failures before the crisis, when there were no speed-limiters to slow the banking boom down. The Bank declined to comment on Mr Cumming’s comments.