Summary
THE CHANCELLOR, Alistair Darling, gives his Mansion House speech tonight -- his first since he defied Gordon Brown's attempts to shift him from the Treasury. The speech could have been the cue for a US-style rethink about banking regulation. Instead, the Chancellor will insist that there is nothing wrong with the tripartite system established by Mr Brown, which divides responsibility between the Bank of England, the Treasury and the Financial Services Authority, the FSA. He wants instead to see higher calibre people in bank boardrooms: "Their focus must be on longterm wealth creation, not short-term profits."
Few people would argue against improving the calibre of banks' boards. But Mr Darling's stubborn refusal to entertain change suggests a worrying inability to learn the obvious lesson of the credit crunch, which is that the division of responsibility for the regulation of financial institutions meant confusion about who was actually in charge. Once there was no doubt about where the ultimate responsibility for bank regulation lay: it was with the Bank of England. Now, the role of the Bank is unclear. It sets interest rates, certainly, by convening a committee of outside and internal experts twice a month, but its role beyond that is anyone's guess. It should be restored to its leading role, providing a body and an individual -- the Governor -- to look at the bigger picture, to identify structural rather than day-to-day problems with the banking sector.See the full content of this document
Extract
Bank of England must be put back in charge
The FSA has been told that it should ...
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