Daily Archives: November 24, 2009

Chris Giles

The Treasury Select Committee was on particularly supine form when half of the Monetary Policy Committee came to give evidence this morning, writes Chris Giles of the Financial Times, allowing Mervyn King and Pauol Tucker to paper over their differences on banking regulation. 

The ratings agencies have been busy: we are awash with downgrades and warnings. First up, S&P. They have ranked banks’ health using a new methodology, and it makes for grim reading. Just nine of 45 banks exceeded the minimum “risk-adjusted capital” ratio (for example, HSBC did well; UBS and Citigroup less so). The results are important because the new methodology foreshadows the new capital regime ratio likely to be adopted by Basel next year. S&P conclusion: “Capital for the majority of banks remains a relative weakness.”

Next, Fitch has downgraded Mexico to BBB, just two notches above junk status. 

Chris Giles

Giving evidence at the Treasury Select Committee, Mervyn King, Bank of England governor, has just repeated his view that “banks that screw it up should be allowed to fail”.

You can see why. The Bank has also just revealed a few minutes ago that it engaged in secret emergency lending to RBS and HBOS at the height of the crisis last year. £61.6bn was lent between 1 October 2008 and 16 January 2009. These huge sums kept cash machines open. The alternative was very scary. No wonder King hates the banks so much.