Mervyn King: Mortgage market unlikely to EVER return to pre-credit crunch levels

dudleyboy

Not a direct quote, but good enough for me!

http://news.bbc.co.uk/1/hi/business/7557777.stm

The Bank of England says it expects the UK economy will not grow at all over the next year or so.
In the Bank's gloomiest assessment yet, governor Mervyn King said that he expected growth "to be flat" and did not rule out a recession.

...
"I think with broadly flat output, it's bound to be the case that there is a possibility of a quarter or two of negative growth," Mr King said.
...
Mr King said that banking system might sustain more losses as the economic downturn gathered momentum.
"For some institutions... they are over the worst and for other perhaps not. But I think we have certainly moved some long way down the road."
The governor stressed that the mortgage market was unlikely to ever return to pre-credit crunch levels, when 100% mortgages were commonplace.
But he rejected suggestions that the UK should follow the US example and create a government-sponsored agency to guarantee mortgages and kick start lending.
"It's the lenders who should take the risk and assess for themselves the riskiness of that lending. And what we saw in the first half of 2007 was that not enough attention was paid to monitoring the riskiness of that lending," he said.

I love this guy almost as much as I love Vince Cable. :beer:

ad44downey

Great aftertiming by mervyn king. It's a pity mervyn never told the banks this during the middle of the great mortgage giveaway

WTF?_2

Never say 'Never'.

Human greed dictates the banks will do it again if they think there's money to be made and the regulators let them get away with it. Also, they now know for sure that they will be bailed out from the ultimate consequences of their actions.

morg_monster

As !!!!!! says, it's ridiculous to say "never". History is always destined to repeat itself... we make stupid mistakes and learn from them for a while... and say "never again" but then the people involved get too old or rich or dead to remember and we go around again.

Sir_Humphrey

ad44downey wrote: »

Great aftertiming by mervyn king. It's a pity mervyn never told the banks this during the middle of the great mortgage giveaway

He made plenty of non-too-subtly coded warnings before the credit crunch.

harbinger13

In the same light - apparently Alan Greenspan is releasing a version 2 of his book - Age of Turbulence (Part Deux) - highlighting solutions for how to handle this crisis. Probably the highest royalty paid part one didnt sell enough - he came back in round 2, like so many of the sequel movies where Part 2 sucks than Part 1. The man wont quit trying to provide patchy solutions for the mess he overlooked; earnestly he was sleeping and instead of reacting to glut of money overflowing in the economy and starting to raise rates as early as 2004 he sat there twiddling his thumbs and thinking about his book and royalty.

dudleyboy

!!!!!!? wrote: »

Never say 'Never'.

Human greed dictates the banks will do it again if they think there's money to be made and the regulators let them get away with it. Also, they now know for sure that they will be bailed out from the ultimate consequences of their actions.

I absolutely agree. Perhaps he should have added "in my lifetime". And hopefully mine too.

mewbie_2

I'm puzzled as to the point of Mervyn King and the B of E. They failed to stop the lending madness, they didn't sort out Northern Rock, they didn't act on widespread mortgage fraud, they allowed 125% loans for Chrissake! They meet once a month to make a decision that a twelve year old could do, and the markets have already signalled the right way to go.

So what is their point exactly? Yeah, I know he's cuddly but there has to be something more, surely?

Generali

mewbie wrote: »

I'm puzzled as to the point of Mervyn King and the B of E. They failed to stop the lending madness, they didn't sort out Northern Rock, they didn't act on widespread mortgage fraud, they allowed 125% loans for Chrissake! They meet once a month to make a decision that a twelve year old could do, and the markets have already signalled the right way to go.

So what is their point exactly? Yeah, I know he's cuddly but there has to be something more, surely?

Most of the stuff you list is part of the FSA's remit - the BoE has no power to act on bad or illegal lending any more (and hasn't since 1997).

Most of what the Bank of England does is to provide stability in financial markets by acting as 'lender of last resort'. Not the current shennangans but providing short term liquidity by lending against government bonds.