I have received a number of pointed responses from the readership on my piece regarding the Tripartite Authority and the role of The Bank of England, most of which have suggested that I am either naive or just daft in my conclusion. Yes, sadly, they believe that this benighted commentator seemingly strayed into the regions of Cloud Cuckcoo Land and posited the absurd, the impossible, the outré - what a silly notion - to propose that the Bank of England be the focal point of the Tripartite Authority!!
Attendez mes amis et mes amies, you can let Cassandra alone and start aiming your slings & arrows at the editors of
That's correct THE ECONOMIST! It appears that in this week's edition* that they have chosen to go the route of the absurd, the impossible, the outré, and propose the very same solution, in a piece entitled:
and why regulators didn't catch it.
I will leave it you to read the whole article but would like to draw your attention to the concluding paragraphs:
Brickbats All Round - And One Lesson
No one emerges well from this tale. Northern Rock pushed an aggressive business model to the limit, crossing its fingers and hoping that liquidity would always be there. The FSA failed to spot the danger. The Bank of England worried too much about forgiving over-risky behaviour and too little about shoring up a stressed financial system. Mr Darling failed to reassure depositors when he eventually got round to it, then arguably reassured them too much when it no longer mattered.
But the biggest failure was the “tripartite” system, and its unreadiness in a crisis. Undoing the reform of 1997 that divested the central bank of supervision would be hugely disruptive; and other countries have divided central banks from banking supervision without seeing financial institutions go to the wall. But if Britain is to learn one lesson from the Northern Rock saga, it may be that a single outfit needs to be in overall charge of financial stability, the bedrock on which economies are built. Only a central bank can provide the liquidity needed in times of crisis. So whatever its failings this time, it is the Bank of England that should take responsibility and call the shots.
May I simply add, HEAR, HEAR!Cassandra
PS May I direct you to Matthew 13:57 and/or Mark 6:4? Either will do, but preferably from the King's James Version.
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* Oct 18th 2007 from The Economist print edition. For the full article please go to
http://www.economist.com/displaystory.cfm?story_id=9988865
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