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

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Recruitment Genius: Junior Developer / Mobile Apps / Java / C# / HTML 5 / JS

£17000 - £28000 per annum: Recruitment Genius: Junior Mobile Application Devel...

Recruitment Genius: LGV Driver - Category C or C+E

£23000 - £26000 per annum: Recruitment Genius: This national Company that manu...

Recruitment Genius: Sales Consultant - OTE £30,000

£13000 - £30000 per annum: Recruitment Genius: Scotland's leading life insuran...

Recruitment Genius: Maintenance Assistant

£25000 - £30000 per annum: Recruitment Genius: A Maintenance Assistant is requ...

Day In a Page

Read Next
Newspaper stands have been criticised by the Child Eyes campaign  

There were more reader complaints this year – but, then again, there were more readers

Will Gore
 

People drink to shut out pain and stress – arresting them won’t help

Deborah Coughlin
A timely reminder of the bloody anniversary we all forgot

A timely reminder of the bloody anniversary we all forgot

Who remembers that this week we enter the 150th anniversary year of the end of the American Civil War, asks Robert Fisk
Homeless Veterans appeal: Former soldiers pay their respects to a friend who also served

Homeless Veterans appeal

Former soldiers pay their respects to a friend who also served
Downfall of Dustin 'Screech' Diamond, the 'Saved By The Bell' star charged with bar stabbing

Scarred by the bell

The downfall of the TV star charged with bar stabbing
Why 2014 was a year of technological let-downs

Why 2014 was a year of technological let-downs

Security breaches and overhyped start-ups dominated a year in which very little changed (save the size of your phone)
Cuba's golf revolution: But will the revolutionary nation take 'bourgeois' game to its heart?

Will revolutionary Cuba take 'bourgeois' golf to its heart?

Fidel Castro ridiculed the game – but now investment in leisure resort projects is welcome
The Locked Room Mysteries: As a new collection of the genre’s best is published, its editor Otto Penzler explains the rules of engagement

The Locked Room Mysteries

As a new collection of the genre’s best is published, its editor explains the rules of engagement
Amy Adams on playing painter Margaret Keane in Tim Burton's Big Eyes

How I made myself Keane

Amy Adams hadn’t wanted to take the role of artist Margaret Keane, because she’d had enough of playing victims. But then she had a daughter, and saw the painter in a new light
Ed Richards: Parting view of Ofcom chief. . . we hate jokes on the disabled

Parting view of Ofcom chief... we hate jokes on the disabled

Bad language once got TV viewers irate, inciting calls to broadcasting switchboards. But now there is a worse offender, says retiring head of the media watchdog, Ed Richards
A look back at fashion in 2014: Wear in review

Wear in review

A look back at fashion in 2014
Ian Herbert: My 10 hopes for sport in 2015. Might just one of them happen?

Ian Herbert: My 10 hopes for sport in 2015

Might just one of them happen?
War with Isis: The West needs more than a White Knight

The West needs more than a White Knight

Despite billions spent on weapons, the US has not been able to counter Isis's gruesome tactics, says Patrick Cockburn
Return to Helmand: Private Davey Graham recalls the day he was shot by the Taliban

'The day I was shot by the Taliban'

Private Davey Graham was shot five times during an ambush in 2007 - it was the first, controversial photograph to show the dangers our soldiers faced in Helmand province
Revealed: the best and worst airlines for delays

Revealed: the best and worst airlines for delays

Many flyers are failing to claim compensation to which they are entitled, a new survey has found
The stories that defined 2014: From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions

The stories that defined 2014

From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions
Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations

Disaster looming? Now you know where to head...

Which British city has become the first to be awarded special 'resilience' status by the UN?