Finance and Economic

Bank of England Governor Mervyn King said he wanted the central bank to have more authority in decisions on when to rescue a troubled lender, in legislation proposed to fix Britain's financial stability rules.

The run on Northern Rock Plc last year and its nationalization in February sparked a debate about who decides whether and when a bank should be rescued. The government has proposed that the power should go to the Financial Services Authority regulator rather than the central bank.

“I would have preferred an outcome in which either the FSA or the Bank of England could have initiated the trigger,'' King told lawmakers in testimony at the Treasury Select Committee in London today. “`We will not have the right to initiate the trigger. We will have a right to make a written recommendation.''

Prime Minister Gordon Brown's government has put off plans to introduce new legislation this month. King said lawmakers shouldn't hurry new rules through parliament.

“It's more important to get it right than to rush it to a fixed timetable,'' King said freecreditscore. “There is a lot of detail still to be discussed. But in the broad intentions of the document, the bank has been granted the powers to manage that regime.''

King said that the lack of rules for how to rescue banks was the reason why the problems with Northern Rock “dragged on and on.'' He welcomed plans for the government to insure savers' deposits at banks.

The Treasury, the Bank of England and the FSA are devising what they call a “special resolution regime'' that aims to limit the impact of a banking crisis on the rest of the economy. It would also give the Treasury powers similar to those of U.S. regulators to appoint an administrator and a “bridge bank'' to handle the assets of financial institutions in danger of bankruptcy, the Treasury said yesterday.

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