David Blanchflower, who sat on the MPC between 2006 and 2009, said the governor oversaw an organisation with shockingly “low morale,” reported the Telegraph.
He described King (pictured) as: “A tyrant that looks to his own advantage rather than that of his subjects and uses extreme and cruel tactics.”
He also intimated King had become too political, criticising his “dalliance with fiscal policy” as a “major mistake”. He added the governor had crossed a line by endorsing the coalition government’s failed austerity programme.
Blanchflower urged the Bank to appoint an outsider to succeed King, as speculation mounts over who will be put forward for the top job.
He suggested trade minister Lord Green; the former HSBC chairman John Varley; the ex-boss of Barclays Bank; or the recently retired cabinet secretary Gus O’Donnell.
As one of the MPC external members, Blanchflower said he “clashed with King many times”.
Writing in the New Statesman, he added King kept external members in the dark over the emergency loans to HBOS or the Royal Bank of Scotland in 2008, despite their relevance to decisions on interest rates and quantitative easing.
He added the governor had been “unprepared” for the bank run on Northern Rock in August 2007, even though there were obvious signs banks that depended on wholesale money markets were in trouble.
Blanchflower’s comments came amid rumours Mark Carney, the Bank of Canada governor, had been sounded out for the job. That drew a riposte from Sir John Peace, the chairman of Standard Chartered bank, who said the Bank needed a British governor.
King, who has been governor for 10 years, steps down on 30 June, 2013. His successor will inherit a newly empowered Bank in charge of large parts of financial regulation as well as monetary policy. Paul Tucker, deputy governor is hotly tipped as favourite.
