UK Bank Chief Takes Heat After U-Turn

Rescue of Northern Rock leads to calls for resignation
By Jason Farago,  Newser Staff
Posted Sep 20, 2007 9:26 AM CDT
UK Bank Chief Takes Heat After U-Turn
Bank of England governor Mervyn King speaks in this image taken from TV to the House of Commons Treasury Committee in London Thursday Sept. 20, 2007. King Thursday defended his decision to inject 10 billion pounds (US$19.9 billion euro 14.4 billion) into the money markets in the wake of the Northern...   (Associated Press)

(Newser) – The leader of the Bank of England, the Fed's counterpart in the UK, is facing substantial pressure to resign. Only last week Mervyn King had declined to offer loans for inter-bank trading to ease credit markets, vowing to discourage the "moral hazard" of risk-taking that led to Northern Rock's collapse. But yesterday the bank injected £10 billion into the money market, and London's financial world is crying foul.

King still has the full support of the government, and some economists have proposed that the bank had to break its own promise to avoid widespread damage to the economy. But several newspapers have called for King to step down after his climbdown, and the chairman faces a grilling before a parliamentary committee today. (Read more Bank of England stories.)

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