As the FT has reported this morning:
Bank of England governor Andrew Bailey did not provide “an adequate reason or excuse” for failures to protect savers in the £236m London Capital & Finance collapse, the head of the independent inquiry into the scandal told MPs on Monday.
I admit I have little interest in the details of this case. I am interested in the political economics of it. Remember, political economics is about how power relationships impact on the use of resources within society.
The case made is that Andrew Bailey biased his actions in favour of the financial institution and not the consumer. He used power to support the financial entity, in other words
There is also suggestion that he sought to downplay his role in this matter.
Both suggestions matter because of Bailey's current position. We can reasonably conclude he is a vane man for whom protection of the financial establishment comes first in his ordering of priorities. It is not an ideal profile for a Governor of the Bank of England at this moment. I suggest that if there is a lesson to be learned it is that Bailey's priorities might need realignment.
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The institution of the BoE is geared to look after the financial sector, it is always its no 1 priority. The BoE is concerned with maintaining the status quo and merely tweaks the current lamentable system, it will never be a radical solution on it own.
That said Beetle Baily is a rather strange creature, despite being a civil servant he seems to think he has some real power base.
It is his behind the scenes efforts to keep his name out of the report that grates most with me. We all make mistakes but the efforts to evade responsibility look bad. It speaks to character like nothing else.
In general, regulating retail investors is a difficult game. Too restrictive and retail complains of being frozen out of interesting markets and products. Too loose and people lose money to scams and risky products. If they lose money then you have to decide whether to compensate? To do so creates moral hazard, not to do so creates hardship……. and when it all goes wrong, hindsight is 20-20.
Having stated that my sympathy is with the regulators in this difficult balance….. I have to say, the FCA has failed terribly too many times to get the benefit of the doubt.,,,, Bailey was poor but the problems at the organisation run deeper.
Words fail me
https://uk.finance.yahoo.com/news/bank-of-england-andrew-bailey-direct-government-finance-bond-buying-gilts-qe-mmt-151755044.html
Staggering
I may vlog about it….