Bank of England Governor Mervyn King said MF Global Holdings Ltd. posed too small a risk to financial stability to merit a bailout.
The failure of the firm “was an example of a company where quite frankly there was no public interest in saving it,” King told lawmakers at a U.K. Parliament committee in London today. “That’s what we didn’t have when Northern Rock failed.”
MF Global, the broker-dealer run by former New Jersey governor and Goldman Sachs Group Inc. co-chairman Jon Corzine, filed Chapter 11 bankruptcy on Oct. 31 in New York after its bets on European sovereign debt went sour. KPMG LLP will supervise the special U.K. administration, the Financial Services Authority said in a statement this week.
The firm was undermined by “the inability of management to see that they constructed a model that couldn’t withstand stress,” Andrew Bailey, director of banking supervision at the Financial Services Authority, said at the same hearing.