MYNERS: BANK BOFFINS CAN’T REPLACE THE FSA
CITY minister Lord Myners yesterday launched a scathing attack on Tory plans to transfer huge regulatory powers to the Bank of England, claiming the central bank neither wants nor has the right skills for the job.
“They have misjudged the competence and culture of the Bank of England. The Bank is a very academic institution. It is not actually about doing things,” he said in an interview with City PM
‘The Bank is good at looking at the wider picture but it does not want to be supervising and reflecting on individual banks. Do we want the Bank of England distracted by supervising building societies and insurance companies?”
To make his point, Myners referred to the collapse of BCCI and Barings, which took place under the previous system when the Bank of England headed financial supervision.
The comments will fuel growing fears that the government is preparing to use the Bank of England as a political football as its fight with the Tories becomes increasingly bitter in the run up to the general election.
A Tory spokesman responded angrily to Myners’ claims about the Bank of England.
“For the minister who was given the runaround by Fred Goodwin – and signed off his pension – to tell anyone, let alone the Bank of England, that they don’t know what they’re doing is truly breathtaking and shows just how out of touch Labour really are.”
Myners yesterday also claimed that all three City-based regulatory bodies poised to gain new powers under a Conservative government do not want the extra responsibilities. “The Bank of England does not want the new powers, nor does the Takeover Panel and nor does the Financial Reporting Council (FRC),” he said.
Paul Boyle, chief executive of the FRC, said yesterday: “We’re not bidding for new responsibilities but we’re not opposed to taking them on either.”
Neither the Bank of England nor the Takeover Panel wanted to comment, although Panel insiders said there were concerns about a possible change in its culture if more responsibilities were taken on.
Myners was responding to Conservative plans, published earlier this week, to abolish the Financial Services Authority (FSA), shifting its duties and responsibilities to other bodies. The Tories advocate a much bigger role in supervision for the Bank of England, giving it responsibility for overseeing the financial stability of banks, building societies and insurance companies.
The City minister, who said he’d be delighted to serve in a future Labour government in the unlikely event of it being re-elected and despite his recent suggestion he might one day study theology, described much of the Tories’ thinking on financial supervision as “incomplete”.
“What we’ve heard so far represents about 20 pieces out of a 100 piece jigsaw.”
He said he did not think the abolition of the FSA was a fait accompli “by any stretch”.
“The more people look at the Conservative proposals the more holes there are in them.”
“The leadership of the FSA is going to have to devote more time to stabilising the situation they have been exposed to unnecessarily by poorly thought through proposals from the Conservatives.”