King stays head of Bank of England

Stephen Beard Jan 31, 2008


Scott Jagow: In Britain, Mervyn King has been reappointed head of the U.K.’s version of the Federal Reserve, the Bank of England. This is newsworthy because it looked like King was out. He took a stand against banks who got themselves in trouble with subprime investments. From London, Stephen Beard has more.

Stephen Beard: Mervyn King will now serve another five-year term as governor of the Bank of England.

Last fall, his reappointment seemed unlikely. He was widely attacked for not initially following the example of the Fed and pumping money into the system to ease the credit crisis. He said that would reward the banks for their reckless lending. He seemed to believe the banks should suffer more discomfort.

Under pressure, King eventually changed tack, and flooded the money markets with cash.

Jonathon Loynes of the Capital Economics Consultancy says King’s been reappointed for the sake of continuity:

Jonathon Loynes: There would have been a danger that the appointment of a new governor with whom the markets were much less familiar would have led to extra uncertainty in what is already a very difficult and uncertain period.

But King clearly remains unpopular with Britain’s investments banks. Only two senior executives have welcomed his reappointment.

In London, this is Stephen Beard for Marketplace.

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