–King: US Bank Regulation Was Distorted By Lobbyists
–King: Urges UK Lawmakers Not To Fall Into US Trap
–King: UK Shouldn’t Lower Standards To Get Bigger Financial Sector

LONDON (MNI) – The recently approved US Financial Reform Bill was
heavily influenced by the banking lobby and UK lawmakers must not fall
into the same trap, Bank of England Governor Mervyn King told the
Treasury Select Committee Wednesday.

King urged UK lawmakers at the TSC hearing not to try and boost
business here by coming up with a more lax regulatory approach than in
the US. He said they should ignore the siren calls of the banking lobby
and come up with the right regulatory structure to ensure financial
stability.

“I don’t think we should see legislation being introduced in other
countries as an opportunity for us to somehow lower standards and get a
bigger financial services sector,” King said.

“That was one of the views that led to the predicament we are now
in,” he added.

“What we should do is to ask ourselves … what is the right
framework to have?” King said.

King poured scorn on the US Financial Reform Bill.

He described it as a “morass of different provisions which is
massively long and, to be perfectly honest, reflected a very large
amount of lobbying which has been succesful.”

The BOE Governor said he hoped “this committee will be able to lead
parliament in resisting the excessive lobbying which will no doubt rain
down upon your heads.”

The details of the UK’s financial regulatory reform are still to be
agreed although it is known the BOE will get responsibility for macro
prudential regulation.

King said that he had previously believed the BOE should avoid
reputational risk by being ensnared in regulation, but he had come
“reluctantly to the view it is probably sensible to have prudential
regulation inside the Bank.”

He said recent experience showed that although the BOE was not
responsible for bank supervision, it had been dragged into trying to
sort out the banking sector debacle and it was better it had more powers
to do so in future.

–London newsroom 0044 20 78627491; email: drobinson@marketnews.com

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