Blanchflower attacks King
Ex-Monetary policy committee member David Blanchflower has strongly attacked Bank of England Governor Sir Mervyn King as "culpable" for the aftermath of the financial crisis.
After Sir Mervyn admitted this morning the Bank shared the responsibility for going along with “a system of banking that failed”, Mr Blanchflower accused him of trying to "push blame on the banks, Gordon Brown, everybody else" in an attempt to avoid responsibility for "the greatest macro mistake of a Bank Governor in a century".
Sir Mervyn told Radio 4's Today programme: “My main point was not to try and blame anyone – this was not the fault of a few bankers, a few politicians, or even the fault of a few central banks – this was the failure of a system, and I accept our share of responsibility in going along with a system of banking that failed.”
Sir Mervyn’s admission has led to David Ruffley, a member of the Treasury Select Committee, calling for a Parliamentary investigation into the bank’s role in the financial crash. But the committee’s chair Andrew Tyrie instead urged the Bank of England to conduct an internal review into its role.
Conservative Party Deputy Chairman Michael Fallon, said: "The Governor of the Bank of England is right. Ed Balls got the big judgment wrong when he was in government, and he’s got it wrong now."
But Labour has criticised Sir Mervyn's intervention on election day, with Andy Love describing it as an "unwise intervention". He added that the Governor is "compromising his position by once again backing George Osborne's economic plan".
In a lecture last night, Sir Mervyn also called for the recommendations made in the Vickers report on banking reform to be implemented "sooner rather than later".
Dr Andrew Sentance, an economist and another former member of the Bank's Monetary Policy Committee, said reforms to the banking system had to be global, and needed to encourage greater economic co-operation throughout the world.
"I’m not sure it was monetary policy in the UK is at fault. I think the global monetary conditions were too loose, but you had to look at the big powers in the global economy, the United States and China, to really look at why that was the case and the solution to that would have laid in better global economic co-operation," he told BBC Radio 5live.