UPDATE: the 21 Sep edition of the Daily Telegraph reports an example, perhaps, of the moral hazard banks (and N Rock in this case) engage in when knowing there is a lender of the last resort handy. Still want to fixate on Mr King?

Today the Governor of the Bank of England faces a Treasury Select Committee where, in the wake of the Northern Rock episode, he is not likely to receive a sympathetic hearing. Already the media characterise Mr King as an “academic” (a put-down, apparently) and “very difficult” when the chips were down.

Mr King is not a Sir Humphrey Machiavellian pragmatist. That is a description, for better and for worse, that can be made of Mr Greenspan and, on recent evidence, Mr Bernanke. Mervyn was never going to fudge it on moral hazard; and for this he is going to be made to pay.

Yet the fundamental issue is over-aggressive lending and investment practice in an easy money environment - not whether Mr King bowed to City, Treasury and Downing Street in such a way as to make their lives easier. It may be convenient to attack the “difficult” regulator when things tank; but it is nonetheless misplaced, hypocritical and profoundly unfair.

Still, Mr King does have a fault in this: governments will always protect bank deposits (ie votes) and Mr King perhaps did not grasp how overarching this truth is. Whatever the debate on deposit insurance schemes and the inherent moral hazard risks of a lender-of-last-resort policy no incumbent politician will permit, if it is possible, Zimbabwe-queue comparisons with his administration. For this reason Northern Rock savers were never in danger.

Ex-post the Financial Services Authority, in concert with the Treasury and the Bank of England, will doubtless move to justify their existences by kicking off debate on the deposit insurance scheme front. However, this is an entirely political exercise and there is enough evidence (think back to the Savings & Loans debacle in the US) suggesting that such regulation is in itself a source of moral hazard (in both banks and customers) that contributes to crises. Not that this will ever make such protection other than a political given.

And so Mr King will carry the can for not pulling with the "team". This scribe sincerely hopes during today’s cynical Select Committee confrontation that he gives better than he gets.

Postscript: Cynical it was; yet Mr King held his own with a clever legislative defence. Moreover, it was Deputy BoE Governor Sir John Gieve who was given the real working over by the Chair, John McFall MP, with a hysterically frenzied series of questions surrounding his holidays and which concluded with the rush to judgement "You've not been doing your job".

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