There are two reasons for this. The first is political; the second, and more important, is practical. On the political front the rather clumsy handling of the regulatory announcement has prompted genuine fears in the City that there is a devious campaign afoot to dislodge the Governor from Threadneedle Street. There has been a chorus of support from bankers, publicly and privately, for Mr George whose stature both at home, and more importantly abroad, is immense. To strip the country of a man who is now so closely associated with monetary stability and economic prudence would be an act of vandalism.
The City's concern was prompted less by Mr George's own thought about resigning and more by the crass comments attributed to a senior member of the Government, suggesting that by saying he had considered resigning over the regulatory revamp Mr George had "played into our hands". Such petty arrogance from some anonymous floozie has brought the George supporters out in their droves. The message is clear: Lose Eddie and you lose the confidence of the international financial community.
What was most tragic is that this pathetic sniping threatened to undermine and devalue the Chancellor's richly and rightly applauded move to overhaul the regulatory regime. I have not found a single opponent of the principles which Mr Brown has espoused. Even Mr George would admit it was not the principle which upset him but the manner in which it was announced.
The view from bankers, insurers and regulators this week has been remarkably consistent. Yes, we needed change; yes, it makes sense to bring it under one roof; now it is for us to deliver a regime which will set London apart as having the most efficient and effective regulatory set-up in the world.
It is an awesome challenge which has been set. There is no easy template to copy, no computer model to solve the problem. What is required is a quite radical overhaul and yet this must be achieved whilst maintaining an effective and robust regulatory regime. You cannot stop regulating for a year while the blueprint is drafted.
But it is not mission impossible. Two things help. In Howard Davies the new super SIB will be blessed with a leader of immense talent, energy and respect. He has been universally acclaimed by regulators and regulated alike as the only man who can pull this off. Secondly, there is an enormous amount of goodwill among practitioners to make the new regime work.
There is a third asset, and this is the second and practical element of the Eddie Must Stay campaign, which is the Governor himself. One of the key relationships to be managed is that between the old SIB and the old banking supervisory division. Crucial to that relationship are confidence and consistency, both of which are epitomised by Eddie George.
He is the man who can ensure that Bank staff, present and former, will continue to discharge their responsibilities with professionalism and enthusiasm. He is the man who can ensure that financial stability and financial supervision are actually enhanced and certainly not weakened by their separation. He is the man who has an excellent relationship with Howard Davies. He is the man who can prove that you can take supervision out of the Bank and take the Bank out of supervision.
What we have at the moment is a proposal for change which oozes with potential. However, that potential will only be realised if the energy and enthusiasm of all those involved in the regulatory process can be harnessed. That requires extensive consultation and open debate. It will take longer to implement than it did to announce. Let us hope the Chancellor appreciates that more haste can result in less speed. Let us also hope he appreciates the value vested in his current Governor.
THE water company reporting season begins this week, providing executives with their first real opportunity to deflect the attention which has been poured upon them by the new Labour government. They have been in the windfall tax firing line for some time but last week they were threatened with mandatory targets for reducing leakage by Deputy Prime Minister John Prescott.
Mr Prescott is right to identify leakage as being extremely undesirable. But there is a danger that in focussing so aggressively on mandatory targets he will throw the baby out with the bath water, so to speak.
The key issue here is establishing the economic benefit of reducing leaks. Thames Water, for instance, could make greater inroads into its leakage if it brought London to a standstill while it found and mended its leaks. It could halt dividend payments, slash wages and put up prices. But would it be worth it?
Anglian Water estimates it would cost it pounds 200m, the equivalent of 80 per cent of 1996 profits, if it were forced to fix all its customers' leaks. But who would pay for this?
A point will be reached where it is uneconomical to fix leaks. However, this is not an excuse for inertia. The water companies have not always impressed. It is encumbent upon them to provide both constructive and compelling arguments for how they intend to improve the leakage problem but not eradicate it completely.
The incentive to do this will come from a government which is prepared to deal in the art of the possible. Progress will only come if the stick is used in equal proportion to the carrot, rather than in isolation.