Simon Carr:

The Sketch: Finance – it's so complicated that even the head of the Bank of England can't figure it out

King leafed through the Financial Services Bill, marvelling at MPs’ ability to understand it

Share
Related Topics

Things are so complex now that no one knows what's going on. The professionals like it because it gives them well-paid work to do. It's a general rule in these, the final days.

The Governor of the Bank of England, Sir Mervyn King, was leafing through the Financial Services Bill marvelling at the ability of MPs to understand it.

"It's impossible to read – it's mainly drafted as amendments," he said. Nick Brown on the committee laughed, "We have a crib sheet." The Governor observed, "My version has two completely different sets of page numbers, one at the top and one at the bottom of the page."

Multiply this by itself a thousand times, add in a server's worth of algebra, and a War and Peace of algorithms, and you get to the financial products the clever banks are devising.

He said that regulation was far too legalistic and impenetrable – mainly because every time a regulation is made the banks invent a new product to get round it. The solution – I loved this – was to have things small or simple enough that if a bank is mismanaged it is allowed to go bust.

"That is not a regulatory failure," he said. And if banks conducted themselves in such a way as to be too opaque for regulators – they were probably too opaque for investors and managers alike. The remedy is old school. In the Chamber, Mark Hoban, Treasury minister, responded to an urgent question from Peter Bone and said he wasn't going to give a running commentary on EU events. (You couldn't talk fast enough, mate.) He said a number of things he probably shouldn't – that the euro "was collapsing" was one such. And then Chris Bryant declared that the minister "had said something I've never heard a minister say before."

And what could it have been? "That there is a 'remorseless logic in fiscal union'." This produced much scoffing as George Osborne hardly opens his mouth these days without saying this.

Indeed the idea that the Tories are encouraging fiscal union causes such a ripple in the force field around the Chancellor that Tories want to know what he means by it. There is rarely a cunning plan in politics but it is nonetheless true that fiscal union could trigger a referendum in Britain, which could force the Lib Dems to break up the Coalition, and be punished with electoral annihilation which could result in a Tory majority. In Tote terms – that's quite an accumulator.

twitter.com/simonsketch

React Now

iJobs Job Widget
iJobs General

Scrum Master - Southampton, Hampshire - Excellent Package

£40000 - £60000 per annum + Excellent benefits: Deerfoot IT Resources Limited:...

Senior Scrum Master - Hampshire - £47k

£47000 per annum + Excellent benefits: Deerfoot IT Resources Limited: Key skil...

Geography Teacher

£110 - £200 per day + pension and childcare: Randstad Education Maidstone: Geo...

KS1 Teacher

£110 - £120 per annum + TBA: Randstad Education Reading: KS1 Teacher needed fo...

Day In a Page

Read Next
 

The daily catch-up: fathers looking after children, World Cup questions and Nostradamus

John Rentoul
 

Letter from the Political Editor: Phone and data laws to be passed in haste

Andrew Grice
A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice