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Is it to be a Burns-Vickers double-act?

Chancellor close to a decision

Recent suggestions that Lord (Terry) Burns may be appointed chairman of a revitalised Court (Board of Directors) with greater powers of surveillance than the present Court make a lot of sense.

That means the choice of governor, who will serve one term of eight years, may be between Paul Tucker, deputy governor, and Sir John Vickers, 54, former chief economist at the Bank, now Warden of All Soul’s College, Oxford, and chairman of the influential committee that proposed “ring-fencing” banks’ UK retail operations – recommendations accepted broadly by the government. Although there are moves in some circles to go further than Vickers, and legislate to impose a complete break between investment and retail banking, these are likely to be resisted by the government – and who better to help implement the Vickers vision than the man himself? (At this point may I modestly point out that Hugh Sandeman and I proposed a version of ring-fencing very similar to that contained in the Vickers report and submitted to them long before it became so fashionable? See the Commissions’ website here).

Such a pairing would strike many observers as somewhat dull but safe, especially given powerful support from Andrew Bailey as chief regulator – prospective chief executive of the Prudential Regulation Authority, which will be a subsidiary of the Bank, and deputy governor for prudential regulation. Given such a scenario, the allocation of other top jobs would depend on whether Paul Tucker (still tipped in the media as the most likely next governor) could be persuaded to stay, at least for a time. Paul Fisher, 54, executive director for markets, Andy Haldane, 45, executive director for financial stability and Spencer Dale, also 45, chief economist will complete the top group, along with a new post of chief operating officer, with the peecise allocation of roles to be decided…..

The role of deputy governor for monetary policy will be especially critical, given that Vickers’ reputation as an economist is more in the fields of regulation and competition than in monetary policy and that the present incumbent, Charlie Bean, has plans to leave the Bank – though being willing to stay on for a while to help with the transition.

What the Treasury wants is a governor who –  while guarding the Bank’s independence – is willing to delegate and to “cooperate” on key areas such as quantitative easing, funding for lending, liquidity regulation and the whole future of the banking structure – more than the “Sun King” Mervyn was prepared to do.

It is all very well, but the Old Lady always has been autocractic – it is part of her DNA; fiddling with it may risk adding further to the problems facing whoever will take up the role,  which doesn’t look like it will offer much fun.

The word is that Chancellor of the Exchequer George Osborne is close to making up his mind.