Former MPC rate-setter Posen in attack on 'autocratic' Sir Mervyn

 

Former Bank of England rate-setter Adam Posen hit out at the autocratic style of Sir Mervyn King today in an outspoken attack on Threadneedle Street's deferential culture.

Mr Posen, who served on the monetary policy committee until last September, said the supervision of the Governor and other executives by the Bank of England's court was "very lax".

He told MPs: "There was a very strong culture that if the governor and/or the broader bank executive made a decision and dug in their heels, there was no point in challenging them.

"That was the widespread belief of the court, of many staff in the bank and some external members of the MPC."

The comments – the strongest criticism so far from a recent MPC member – follow a trio of independent reports over the Bank's governance last year.

One by former JPMorgan joint chief executive Bill Winter warned employees had a tendency "to filter recommendations in such a way as to maximise the likelihood that senior staff will find the recommendation palatable".

Mr Posen also clashed with Sir Mervyn over the introduction of the Funding for Lending Scheme last year, which was kept secret from the MPC's external members, prompting a letter of protest.

He also warned that Sir Mervyn's successor, Canadian Mark Carney, risked having too much power when the Bank takes over the responsibility for supervising the financial sector in April through the new Prudential Regulation Authority.

"If it were up to me I would have written the statute differently... because I frankly believe it goes too far. The governor of the Bank of England would be the most powerful single central banker in a major central bank," he added.

Sir Mervyn backed a review of the Bank's inflation targeting regime in a Belfast speech last night, potentially paving the way for Mr Carney to make changes.

The Governor said a "gentle recovery" was under way but added that restoring the health of the UK's banks and supply-side reforms to the economy to encourage investment were also needed.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Talent Acquisition Consultant

£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

Recruitment Genius: Experienced Financial Advisers and Paraplanners

Negotiable: Recruitment Genius: This extremely successful and well-established...

Guru Careers: FX Trader / Risk Manager

Competitive with monthly bonus: Guru Careers: We are seeking an experienced FX...

Guru Careers: Investment Writer / Stock Picker

Competitive (Freelance) : Guru Careers: An Investment Writer / Stock Picker is...

Day In a Page

Lionel, Patti, Burt and The Who rock Glasto

Lionel, Patti, Burt and The Who rock Glasto

This was the year of 24-carat Golden Oldies
Paris Fashion Week

Paris Fashion Week

Thom Browne's scarecrows offer a rare beacon in commercial offerings
A year of the caliphate:

Isis, a year of the caliphate

Who can defeat the so-called 'Islamic State' – and how?
Marks and Spencer: Can a new team of designers put the spark back into the high-street brand?

Marks and Spencer

Can a new team of designers put the spark back into the high-street brand?
'We haven't invaded France': Italy's Prime Minister 'reclaims' Europe's highest peak

'We haven't invaded France'

Italy's Prime Minister 'reclaims' Europe's highest peak
Isis in Kobani: Why we ignore the worst of the massacres

Why do we ignore the worst of the massacres?

The West’s determination not to offend its Sunni allies helps Isis and puts us all at risk, says Patrick Cockburn
7/7 bombings 10 years on: Four emergency workers who saved lives recall the shocking day that 52 people were killed

Remembering 7/7 ten years on

Four emergency workers recall their memories of that day – and reveal how it's affected them ever since
Humans: Are the scientists developing robots in danger of replicating the hit Channel 4 drama?

They’re here to help

We want robots to do our drudge work, and to look enough like us for comfort. But are the scientists developing artificial intelligence in danger of replicating the TV drama Humans?
Time to lay these myths about the Deep South to rest

Time to lay these myths about the Deep South to rest

'Heritage' is a loaded word in the Dixie, but the Charleston killings show how dangerous it is to cling to a deadly past, says Rupert Cornwell
What exactly does 'one' mean? Court of Appeal passes judgement on thorny mathematical issue

What exactly does 'one' mean?

Court of Appeal passes judgement on thorny mathematical issue
E L James's book Grey is a reminder of how the phenomenon of the best-seller works

Grey is a reminder of how the phenomenon of the best-seller works

It's hard to understand why so many are buying it – but then best-selling was ever an inexact science, says DJ Taylor
Behind the scenes of the world's most experimental science labs

World's most experimental science labs

The photographer Daniel Stier has spent four years gaining access to some of the world's most curious scientific experiments
It's the stroke of champions - so why is the single-handed backhand on the way out?

Single-handed backhand: on the way out?

If today's young guns wish to elevate themselves to the heights of Sampras, Graf and Federer, it's time to fire up the most thrilling shot in tennis
HMS Saracen: Meeting the last survivor of a submarine found 72 years after it was scuttled

HMS Saracen

Meeting the last survivor of a submarine found 72 years after it was scuttled
7/7 bombings 10 years on: Martine Wright lost both legs in the attack – she explains how her experience since shows 'anything is possible'

7/7 bombings 10 years on

Martine Wright lost both legs in the attack – she explains how her experience since shows 'anything is possible'