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Pastimes : The Hot Button Questions:- Money, Banks, & the Economy

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To: maceng2 who wrote (1240)	6/28/2009 2:07:23 AM
From: maceng2	of 1417

Darling thwarts King's bid to take wider powersBuzz up! Digg it guardian.co.uk Jill Treanor and Heather Stewart The Observer, Sunday 28 June 2009 Article historyAlistair Darling will deny Mervyn King the crucial powers he is demanding to prevent another financial meltdown until after the general election, the Observer has learnt. A wide-ranging overhaul of bank regulation, expected to be announced by the Treasury shortly, will not contain any new legislation to address the complaint of the Bank of England governor that he "can do no more than issue sermons or organise burials", when the financial system is on the brink. There has been a bitter public stand-off between King and the chancellor about how best to learn the lessons of the credit crunch. The governor says his new legal responsibility for financial stability comes without any levers to stop new crises emerging. Instead of promising King a new toolkit, Darling will publish a green paper to kickstart a longer debate on the so-called "macro prudential" measures to prevent dangerous bubbles. Options include a change in the monetary policy framework or the introduction of product regulation that could prohibit risky 125% loan-to-value mortgages, and the introduction of counter-cyclical capital cushions, where banks could be required to accumulate more capital in the boom years, to be eaten into during the bust. The Treasury is nervous about handing powers to the Bank - such as restricting credit in boom years - that could provoke public fury if they were triggered. If Conservative George Osborne is chancellor after the next election, however, he has already suggested that he would give the Bank the job of signalling when credit in the economy was expanding too rapidly.

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