The clamour for King's head

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Mervyn King "is the biggest casualty of a financial fiasco" is the verdict The Economist pronounced on the Governor of the Bank of England yesterday at the end of a week that has seen an increasing number of calls for his head in the British press.

Under the headline "The Bank that failed", the influential weekly stopped just short of an explicit call for Mr King's resignation in the wake of Northern Rock's bail-out and the Bank's subsequent, unexpected injection of £10bn into the money markets, but it concluded that he "has lost credibility; and a central banker without credibility is not much use".

The Financial Times likewise argued that while the institutions of the tripartite system – the Bank, the Treasury and the Financial Services Authority – all share responsibility, it is the Bank that has lost the most credibility. As the Bank opened the taps for three-month money, the online edition asked whether Mr King could survive. "Can the Governor stay in these circumstances? Does he want to? Surely this is one U-turn too many?"

The Daily Telegraph has argued that Mervyn King must go since Wednesday's climbdown. His credibility has been "fatally holed" ... "Either he must go because he has fluffed his first serious test. Or he must go because his position has been undermined by a twitchy Government desperate to avoid disaster so early on its watch".

The Times, however, remains unconvinced. It agrees that the Governor's credibility was uncertain after what it described as a "bungled rescue of Northern Rock and a U-turn on liquidity policy", but argues that this is "not a time for blame, but for better understanding".

At The Guardian too the consensus was Mr King had to fight for his reputation after the "toughest week of his career". The paper, however, also rejected the notion there had been a U-turn. Mr King should not be branded as the culprit, though his decision-making process should have been more transparent. The paper believes the Governor's policy of "tough love" towards the banks is still intact, the penal rate still applies and the minimum price at which banks will be offered credit is still a painful 6.75 per cent. Yesterday it felt the focus should shift not only to Northern Rock's chief executive, Adam Applegarth, but to Northern Rock's future as an independent institution.

The Independent has been critical of the Bank's handling of the credit crisis in general, and considered the Governor to have been badly damaged by the Northern Rock debacle. Even though there are unanswered questions about Mr King's handling of the crisis, why liquidity was not provided earlier, and why he made his dramatic U-turn, ultimately he should stay on. "Anyone who can be that convincing deserves to survive."

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