Alan Greenspan, former chairman of the Federal Reserve, has thrown his weight behind Mervyn King, the governor of the Bank of England under fire for his role in the Northern Rock crisis, The Telegraph reports.
"Mervyn King is one of the most effective central bankers I have ever met," said Mr Greenspan. "I am a great fan of his. He understands how markets work. I hope Britain has him as its central banker for many years to come."
The American also dismissed suggestions that central bankers should serve one term, a proposal put forward by the Conservative Party. "Central bankers start to really learn their skills after four or five years - and then someone wants to retire them." Mr King has been governor since 2004.
BRITISH LENDERS ARE SHUNNING the Bank of England and turning instead to the European Central Bank on a massive scale, taking advantage of much lower interest rates and guaranteed anonymity to weather the credit crunch, The Telegraph reports.
EU sources say Britain's banks have been clamouring for money in Frankfurt, accounting for a substantial chunk of the €190bn (£132bn) lent last week in the ECB's variable tender operation. "It is fair to say they have been borrowing from the ECB on a very large scale. It's cheap, so why not," said one official.
The UK banks were also major subscribers at the €50bn issue of three-month loans on September 27 at 4.63%, and the earlier tender of €75bn on September 13.
TWO OF THE WORLD’S BIGGEST BANKS announced a $10bn (£4.8bn) reversal in their fortunes yesterday as they gave warning of massive hits to their third-quarter results, The Times reports.
Analysts and bankers said that further pain would be inflicted on the sector before the credit squeeze had run its course. Attention will next focus on Deutsche Bank, which will report on its third quarter on October 31.
Brad Hintz, an analyst at Sanford C Bernstein, said: “The storm has hit everybody and we certainly haven’t seen the last of it. There’ll be plenty more banks giving profit warnings and making writedowns as their earnings days approach.”
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