We posted last week about the NYT’s smear of Mervyn King (as did London Banker), and followed that up with some observations on the UK Chancellor’s dreary capitulation to the banks, aka “Project Merlin”; we concluded somewhat world-wearily by promising more sightings of attempts to nobble the UK’s radical bank reformers.
Well, here’s the first, from Bloomberg:
Bank of England Governor Mervyn King may not get the chance to exercise new powers over banks under legislation to be introduced later this year by Chancellor of the Exchequer George Osborne.
Osborne’s bill abolishing the U.K.’s financial regulator and handing most of its authority to the central bank in London is due to take effect in 2013 as King’s second five-year term as governor expires.
The almost three-year-long process stems from the need to consult industry and lawmakers, Treasury spokesman said. The timetable reflects differing views between King and the government on issues including the amount of capital banks should hold, said three people familiar with the matter who declined to be identified because the issue hasn’t been made public. The Bank of England declined to comment.
“For something the government said was so important, they are not treating as if it is. It seems very strange,” said Steven Fielding, a professor at the Center for British Politics at Nottingham University. “Unless there is some kind of other reason, it’s very surprising.”
Of course your humble blogger is not at all surprised, and after last week’s trailer, I doubt if this blog’s readers are, either: we know why this is happening.
Let’s say the process of rethinking bank regulation started in earnest in March ’09. Two years later, we have Dodd-Frank and Basel III. Admittedly, both are dog’s breakfasts, but why, pray, is is going to take three more years of consultation with representatives of four big banks (HSBC,Lloyds-HBOS, RBS, Santander), and a bunch of tiddlers, to get our super-duper UK banking regulation sorted out?
It’s a simple enough subterfuge, isn’t it? Just drag out the process so long that King is off the scene before some watered-down version of the bank reforms comes into effect.
It’s still hard to see how this bit of deviousness can possibly work out as intended, given the depth of support for radical bank reform ideas at the BoE. But if we see the likes of Tuckey, Haldane and Miles somehow pushed quietly to the sidelines along with King, then you can start to pencil in a complete triumph of the bankers.
I imagine some or all of the reformers will be making some public noise, before it comes to that. If the government even lasts that long.