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Last Updated: Oct 28th, 2008 - 17:57:18 |
LONDON (Reuters) - The Bank of England should have the power to initiate state help for failing banks, Governor Mervyn King said on Tuesday.
Under current proposals to reform the oversight of banks following the failure and nationalisation of mortgage lender Northern Rock, the Bank will only be able to recommend that the Financial Services Authority salvages a struggling bank.
"It's true that I would have preferred an outcome in which either the Financial Services Authority or the Bank of England could have initiated the trigger," King told parliament's Treasury Select Committee.
"We will not have the right to initiate the trigger."
King said the central bank would have acted a lot sooner to save Northern Rock if the Bank had been given the power to use the proposed special resolution scheme.
"That bank would have been dealt with immediately under a special resolution scheme," he said. "It couldn't be because nationalisation was the only alternative ... We certainly would have handled it differently."
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