Mark Carney slams “socially useless” banks in the UK
Bank of England boss Mark Carney drew largely favourable comment from the UK press after he held his first news conference as Governor of the Bank of England. In a departure from previous B of E practice Carney indicated that current interest rates will not rise for another 3 years or until the UK unemployment rate drops below 7 per cent. This kind of long term financial projection is new to the British financial community; more accustomed to more cautious forecasting by previous governors; but the news was welcomed and the value of the UK pound surged on the news. Commenting on Carney’s forthright approach to monetary policy the Times editorialized: “It is unprecedented for the Bank to give explicit “forward guidance” about the path of monetary policy, as well as keeping interest rates at such low levels. These are exceptional economic times, however, and Mr. Carney is right to take this course.”
Carney also made waves with his comment that the British Commercial banks need to connect themselves to the “real economy” or they will become “socially useless.” He was referring to the recent payment protection insurance scandal, where borrowers were hit with insurance premiums ranging as high as 50 percent of the original borrowed anount, often without the borrower being informed of the added cost. Several chartered banks were fined millions of pounds.
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