Mervyn King states that there is no framework to protect retail depositors at present.

Trumpo has just listened and listened again to Mervyn King, the Governor of the Bank of England interview with Radio 4. I didn’t realise that the regulator had not learnt anything since the collapse of BCCI or Barings Bank, or how serious the whole situation actually is.

When the run on Northern Rock Bank occurred and people lined up to take their money out, it was not possible and would have been dishonest for anybody to say that their money was safe. Neither the Bank of England or the government had the authority to do so when this happened.

What I am shocked and disgusted to hear, is that in the USA, Canada and many other countries, there is a system known as pre-emptive intervention - as soon as the banks are in trouble the government can intervene and saver’s money is immediately transferred to another bank for protection. This pre-emptive intervention is not practiced in the UK - WHY NOT?

This is quite a serious situation we are all in today. Mervyn King states that the same situation occurred with Barings and BCCI. It took savers a year or more to get their money back because no such guarantees or protection were in place when these banks went bust.

Why the hell didn’t the regulator or government learn from this debacle and make it a legal requirement to protect the British people’s hard earned savings. It’s an absolute disgrace and incompetence of the highest level.

The poor regulatory framework, or lack of it, only became apparent when the s**t hit the fan. Mervyn King had to step in get the government to guarantee depositor’s hard earned cash. In the interview he goes on to say that it was right, that when the run on the bank started, it was not the shareholders or management teams objectives which were priority but that of the man in the street and their hard earned savings. Thank God Mervyn stood strong.

Mervyn went on to say that in June he spoke at the Mansion House Dinner that risks were apparent with the way some of the UK’s Banks were accessing liquidity/money and that one day soon that particular marketplace may be illiquid. A couple of months later, on August the 9th the market was completely illiquid. Game over for Northern Rock, who were completely reliant on the money markets liquidity. What he also goes on to say, and I can’t believe it was allowed, is that insurance was available to protect against the funds drying up and the relevant consequences that would follow, but this was and is not a regulatory requirement.

It is no surprise that it is something that’s been on the agenda for sometime with the government and Mervyn will be pushing hard for it to be in place by the middle of next year. I really find it hard to believe that this insurance is not a legal requirement. I find it extremely hard to grasp why a country with so many alleged civil servant financial experts is in this mess. No wonder the rest of the World’s money markets are nervous about British banks!

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