Gloves off! Mervyn King vs Alistair Darling

Chancellor Alistair Darling has come under fire for failing to outline plans for radical change to the banking system following the credit crunch.

Bank of England Governor Mervyn King made some cutting comments about public finances at the annual Mansion House banquet in the presence of Mr. Darling.

Mr. King said that it will be necessary to “produce a clear plan to show how prospective deficits will be reduced during the next Parliament, so returning to a gradually declining path for the ratio of national debt to national income.”

He added that “It is not sensible to allow large banks to combine high street retail banking with risky investment banking or funding strategies, and then provide an implicit state guarantee against failure. Something must give.”

Ahead of the dinner, Liberal Democrat Shadow Chancellor Vince Cable said:

“Alistair Darling has thrown in the towel when it comes to the big banks. Self regulation got us into this mess and to continue with business as usual would be madness. What we need is a radical reform of the City of London.”

“Boards do need to make more decisions but those who sit round the top table at the banks that have been rescued by the taxpayer, have to start ensuring that the decisions they take are in the public interest.”

“The concept of private banks being ‘too big to fail’ is an economic and democratic outrage. Either they must be subject to tight state control or they should be broken up so that they are no longer ‘too big to fail’. But Government ministers today seem no less terrified of confronting the banks than when Gordon Brown fled the battlefield a decade ago.”

“Ministers are running away from the necessary reforms for fear of stifling innovation but we need more of this kind of financial innovation like a hole in the head.”