May 22 2012

Bank of England commissions new whitewash

Posted by: Nick Shaxson in: Thoughts

The headline behind the latest article by Chris Giles of the FT about the Bank of England (BoE) had me quite excited for a moment:

BoE bows to pressure for probes

and this comes just a couple of months after Bank Governor Mervyn King said he was ‘baffled’ at calls for a review of the bank. The article starts off optimistically:

“The court of directors’ surprise decision to order the reviews came after sustained criticism of the BoE’s governance, transparency and accountability and as legislation giving it unprecedented new powers makes its way through parliament.”

It’s only when you read further down when you see what is really happening.

Giles’ devastating take-down of the BoE’s King, here and more importantly here, slammed the BoE’s hierarchical structure, King’s appalling lack of any interest in (and even his contempt for) financial stability issues before the crisis, a lack of internal challenge to the governor and weak oversight from the BoE’s court of directors itself. Now the FT, reporting on the latest probes, notes:

Although the decision by the court represents a significant climbdown by BoE executives and non-executives, the BoE soon ran into the criticism that it was still refusing to examine concerns over the BoE’s hierarchical structure, its work into financial stability before the crisis, a lack of internal challenge and weak oversight from the court itself.

Lord Myners, the former City minister and a member of the BoE’s court between 2004 and 2008 said the three technical reviews “carry the fingerprints of the governor”.

“You can feel teeth being drawn [in the selection of the reviews], but it has been carefully selected which teeth are removed and none are central to the performance of the BoE,” he said.”

From The Guardian:

Andrew Tyrie, the Conservative MP who chairs the Treasury select committee, which has led calls on the Bank to explain its handling of the crisis, said the announcement “is not what is needed”.

Sigh. Based on this evidence, it looks like another whitewash, right at the heart of the City of London.

And the BoE is about to get a whole host of new powers, absorbed from the hapless and Lazy-Faire Financial Services Authority.

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