Commenting on the battle for tougher regulation of the Bank of England, Bob Garratt, Visiting Professor at Cass Business School (http://www.cass.city.ac.uk/
“The publication of contrasting models for the future governance of the Bank of England shows from the Bank's proposal a classic example of a Chief Executive wanting the future oversight by their board of directors to be as weak as possible. The Bank is one of our oldest companies and comes under the Companies Act. Given its national importance it should be a model of effective corporate governance. It is not. The 2006 Companies Act stresses the supremacy of the board of directors, in this case The Court, and their role in balancing their challenge of both driving the Bank forward in turbulent times and of ensuring the prudent control of its own organisation.”
“This is what the Governor's proposals seem designed to negate. He diminishes the role of the Court by proposing that the Court should oversee only the Bank's pay and internal management; and that the proposed Oversight Sub-Committee (note the "sub") should monitor only the Monetary Policy Committee's "processes not policy". What chutzpah! It is the similar to being put in the dock for murdering one's parents and then entering a plea for mercy because you are now an orphan.”
“The Bank has failed in its present governance and now, as it receives even more powers, seems keen to do the same again. It has had two main committees neither of which has worked well due to bad design and execution and because neither were controlled by the Board. The one that has had massive publicity, The Monetary Policy Committee, has been the ground for warring macro-economists yet it does not even report to the Court but to the Treasury and will remain so. The other, now the Financial Policy Committee, suffered neglect and lack of oversight by the Court and the Governor until 2008 and the Western Financial Crisis. This is why we had no suitable financial stability instruments available as the crisis hit and had to invent Quantitative Easing rapidly.”
“The alternative proposal by the Treasury Select Committee is somewhat better as it is designed to ensure that there will be at least a Supervisory Board which reviews the work of the Court and its committees. However, there is no need to set up a more complex two-tier structure if the Bank followed the company law and the regulatory codes by acting as a unitary board of which the UK has some four hundred years of experience.”
To speak to Bob Garratt please contact Miranda Thomas, PR and Communications Manager on 020 7040 5274 at Cass Business School who offer undergraduate, specialist Masters, MBA, Executive Education (http://www.cass.city.ac.uk/
# # #
Sir John Cass Business School, City University London, (http://www.cass.city.ac.uk/)
