BANK OF ENGLAND
King's reign prolonged at Bank of England
Wednesday, January 30, 2008
Mervyn King survived the subprime crisis and the Northern Rock scandal unscathed, as he was reappointed for a second five-year term at the head of the Bank of England.
Wednesday, January 30, 2008
By Reuters
Unafraid of courting unpopularity, Bank of England Governor Mervyn King backed his beloved Aston Villa football club instead of the local team when growing up in neighbouring Wolverhampton.
Now nearly 60 and reappointed as head of the British central bank for a second five-year term on Wednesday, King remains equally fearless about speaking his mind -- Edith Piaf's Je Ne Regrette Rien is one of his favourite songs.
The former London School of Economics professor has taken a lot of heat over the last few months over his handling of the credit crunch hitting global markets. Unlike his counterparts at other central banks, King refused at first to throw money at the
problem.
problem.
He argued that banks had got into the mess through unwise investment decisions and it wasn't the authorities' job to bail them out. City of London financiers, nursing huge losses, were furious at being lectured by the bespectacled, schoolmasterly King.
And then in September came Northern Rock, Britain's first bank run in more than a century, after the mortgage lender had to seek emergency funding after being unable to raise cash in jammed-up money markets.
Thousands of Britons queued for hours to their money out of the embattled bank and the television pictures were beamed across the world. Some laid the blame at King's door.
When the governor then faced a parliamentary committee to explain his actions, he looked seriously rattled. Normally neat and impeccably attired, his silver hair was long and ruffled as the MPs laid into the BoE.
Many at home and abroad speculated that King's term would not be renewed when it expired on June 30, 2008, particularly as relations between him and Prime Minister Gordon Brown's government appeared frosty.
Brown, however, has opted for continuity as the economic clouds darken over Britain this year. At the BoE since 1991, first as chief economist, then deputy governor, and finally governor since 2003, King commands a lot of credibility.
"He has attended all 129 of the Monetary Policy Committee's meetings since its start in 1997. He has almost as much experience as the five newest members of the Committee put together," said Jonathan Loynes, chief European economist at
Capital Economics, a consultancy.
Capital Economics, a consultancy.
"King represents a safe pair of hands in what are particularly difficult times for both the financial system and the wider economy."
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