Member Article

Bank of England under fire for poor governance during financial crisis

The chair of the Commons Treasury Committee has launched an excoriating attack on the governance of the Bank of England during the global financial crisis.

Andrew Tyrie MP, the chairman of the Treasury Select Committee, was highly critical of the bank, stating that the governing board was not “worthy of the name” during the financial emergency.

According to evidence contained in minutes of meetings of the Bank of England’s ruling Court between 2007 and 2009, Mr Tyrie says the Court was “almost entirely reactive” during the crisis.

The minutes also reveal that the Bank did identify liquidity as a “central concern” in July 2007, but took no further action.

New Governor, Mark Carney, ordered the release of the Court minutes, as requested by the committee, last month.

The Bank and Lord King has been widely criticised for their management of the run on Northern Rock in September 2007/

But on 12 September 2007, shortly before the collapse of Northern Rock, the minutes state that “several Directors [of the Court] congratulated the Governor for setting out a rigorous intellectual underpinning of his position. The view was that it would be helpful for the market and for commentators and would lead to rather more informed comment.”

Mr Tyrie said: “Publication of these minutes represents a major development in the way Parliament scrutinises this super-quango.”

“These minutes make the clearest possible case for radical reform of the Bank’s governance and the need to address the manifest inadequacies of the archaic approach upon which the Bank were relying during the crisis”.

This was posted in Bdaily's Members' News section by Ellen Forster .