King warns savers exposed to losses unless loophole closed

A loophole in planned banking reforms could leave taxpayers on the hook for billions of pounds in the event of another financial crisis, Bank of England governor Sir Mervyn King has warned.

According to a report in the Telegraph, King has warned there is a lack of protection for depositors whose savings temporarily rise above £85,000 - the current compensation limit. He said this needs to be addressed or else the government could come under pressure to resort to a state bailout again. Paul Tucker, the bank's deputy governor and man tipped to take over from King next year, said it was a "huge issue" which was unresolved. Tucker told MPs yesterday: "The best laid plans [could] get blown up." Under the new proposals, banks would not need a taxpayer bailout in future,...