Bank of England Governor Blasts Pay and Benefits in Financial Industry

We've been hearing more and more about how the bonuses for short term profits encouraged leverage and risky investments, and now BOE governor Mervyn King has joined the fray:

Mervyn King yesterday laid the blame for the credit crunch squarely at the door of commercial banks, criticising their excessive pay packages and risky lending.

The Bank of England governor also told the Treasury select committee he was unhappy that excessive pay in the City attracted too many young people away from careers elsewhere.

Speaking as data emerged showing that the credit crunch had hit retail sales, consumer confidence and mortgage lending hard, King said he hoped the banks would learn the lessons from the crisis and rein in their pay structures and be more responsible in their lending.

"Banks have come to realise in the recent crisis that they are paying the price for having designed compensation packages which provide incentives that are not, in the long run, in the interests of the banks themselves, and I would like to think that would change," King said.

Of course, Alan "Bubbles" Greenspan would argue that the pay schemes were innovation, and a good thing.

I am so glad to see him alive to see his reputation melt away like that of the wicked witch of the west in the Wizard of Oz.