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April 20, 2012 8:04 pm
Senior MPs will next week attempt to impose more supervisory control over the next Bank of England governor, amid fears about accountability at the beefed-up central bank.
George Osborne is under pressure from the Commons Treasury committee to increase the powers of the BoE’s court – its supervisory body – to monitor the performance of the governor and senior staff as the central bank is given sweeping new powers over bank regulation.
Alistair Darling, former Labour chancellor, has called the court weak and “medieval”, comparing its ability to hold the governor to account with the court of France’s Louis XIV.
Mr Osborne has so far resisted pressure to increase its powers. But now MPs have tabled an amendment to the financial services bill – which is debated on Monday – to force his hand. They want the court “to conduct retrospective reviews of the performance of the Bank with respect to its functions and objectives”: that would include an assessment of how it handled the financial crisis.
The Treasury select committee also wants a veto over the chancellor’s choice for governor. But even reformers concede it is unlikely the process could be reformed in time to change the way a successor for Sir Mervyn King, the current governor, is appointed.
The whole affair of the succession was thrust into the spotlight this week when it emerged that Mark Carney, governor of the Bank of Canada, had been approached informally about succeeding Sir Mervyn, who departs in June next year.
Mr Carney disputed he had had any direct contact with the central bank or the court, and the Treasury has denied making the approach. But no one has disputed the existence of an approach per se, now believed to have come through a third party.
Although Mr Osborne’s final decision is not expected until November, talk of Mr Carney’s candidacy has begun a debate about whether the long-time favourite for the role – deputy governor Paul Tucker – should get it given his association with the way the BoE has been run through the crisis.
Some in the Treasury are keen for a shake-up and want to impose an outsider, while Mr Osborne has made it clear he wants to find “the best person for the job”. The airing of Mr Carney’s name has highlighted that the chancellor is not compelled to choose a British national.
Among the other external contenders mentioned by Treasury and BoE insiders are: Lord Turner, chairman of the Financial Services Authority; Sir John Vickers, the Oxford academic who chaired the government’s Independent Commission on Banking; and Lord (Gus) O’Donnell, the former head of the civil service. Mr Osborne has also considered commercial bankers including Lord Green, currently trade minister but previously chairman of HSBC; and Douglas Flint, HSBC chairman, though the chancellor may conclude that appointing a banker would be politically controversial.
One person who spoke to the chancellor this week said another option would be to appoint Mr Tucker as governor but bring in a commercially minded deputy governor to replace the vacancy created by Hector Sants’ recent resignation.
Bankers and analysts say this could include figures such as Richard Meddings, finance director of Standard Chartered, or ex-bankers such as Bill Winters, former head of JPMorgan’s investment bank, and former civil servant John Kingman, or even elder statesman Sir David Walker, senior adviser at Morgan Stanley. What is unclear is whether any of these would be prepared to give up lucrative City careers to play second fiddle to a governor.
Another name cited is Lord Davies, the former StanChart chairman who now helps run Corsair Capital, the US private equity firm.
Though he plays down any interest in such a role, he is uncompromising in his views on governance reform. “This should be a proper transparent process run by a nominations committee comprising government representatives, members of the court and City figures,” Lord Davies says. “You can’t imagine a more important job that spans politics, economics and business. It shouldn’t be a papal process that decides it.”
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