The Bank of England (BoE) should have "shouted from the rooftops" about flaws in the system which could have prevented the banking crisis, governor Sir Mervyn King has said.
King also said light-touch regulation had failed to avert the crisis as he renewed calls for reform of the banking industry.
"With the benefit of hindsight, we should have shouted from the rooftops that a system had been built in which banks were too important to fail, that banks had grown too quickly and borrowed too much, and that so-called 'light-touch' regulation hadn't prevented any of this," he said during a speech at the Today Programme Lecture in London.
King said that three reforms of the system topped his list: regulation, resolution and restructure.
He said that more money from banks' shareholders' should be "on the line", to make banks more careful in choosing to whom they lend.
He added that recommendations made by Sir John Vickers, including ring-fencing retail bank operations, should be enacted "sooner rather than later".
From next year, the BoE's new Financial Policy Committee will have the power to regulate banks.
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