THE B(L)ANK OF ENGLAND.

So, the Bank of England is to take over ‘ macroprudential supervision ’, who comes up with these ridiculous terms ? Is there perhaps an ‘ Office for Coming up with New Terms for the Same Things ’ ? What this means, to the best of my understanding, is that they will now be in charge of overseeing the mystifying financial machinations and deliberate complexity of the glorified casino that is called the financial market.

I looked at their website for the first time today, I wonder how long they have had one ? A current publication that they are offering for enabling members of the public to understand what they are up to is entitled : ‘ Extending eligible collateral in the discounted window facility and information transparency for asset backed securitisations.’ All words except the short ones are capitalised as if to give added importance to the already important sounding document.
What is it all about ? Will anyone except other members of the inner sanctum at the Bank of England and a handful of specialists at the major private financial operations actually understand it ? Will it change anything ? Or is it all more waffle and circumlocution which appears to be deeply serious but actually further confuses the situation by throwing up yet more defensive and evasive language around the remaining fact that the financial institutions both private and, in this case, nominally public, are still essentially making up their own rules and giving their own fiendishly complicated explanations as to what they are doing. And these pronouncements have little connection to the world that the rest of us live in. Do they change anything ? What motivates these people ? Or do they, as I suspect, keep up a continuous stream of meretricious words to create a dense fog that serves only to obscure the same practices, to maintaining the same illusions and give an image of probity. It is a self perpetuating, self justifying nether world that remains completely impenetrable and unchallenged.

They also say that one of the things they do is issue banknotes. That I can understand, what it is based on, as there is no Gold Standard, is again, a mystery. And they do not print them, that was contracted to a private company, De La Rue in 2002, on advice from an outfit called Close Brothers, who are a private banking firm. So, here we have yet again a nominally public institution taking advice from a private firm who no doubt got substantial fees for this advice. Thus a private company is now paid to print the currency of this country.

As with the remarkable Government Committee hearings post banking crisis when some of the Chief Executives of the major banks were lightly grilled, it became apparent that few of these characters had qualifications in financial matters. There was the extraordinary reply from the CEO of Lloyds who when asked what he earned said not very much, about a million pounds a year, which he seemed to think was what the MP’s on the committee earned. While I concede that it will have changed somewhat it appears to me that the Bank of England used to be something of a sinecure for both its Governor and its staff. What they were getting up to in there was anyone’s guess. The very building is one of an anonymous almost windowless citadel, it might better be called the Blank of England with its walled up windows.

When Kenneth Grahame, who subsequently retired to write ‘Wind in the Willows’, was Secretary for a number of years in the late 19th Century the culture, if it can be called that, was one of very short hours, very long lunches and, presumably to alleviate the boredom, fighting dogs were kept in the basement for occasional bouts held in the toilets. Presumably betting was involved. While it is unlikely this is still the case you never know, nothing would surprise me about the arcane world that these people occupy.

In 1903 one George Robinson asked to see the then Governor. Instead Grahame was sent to meet him. He fired three shots from a concealed gun but Grahame was uninjured. He was described as a ‘Socialist Lunatic’ and sent to Broadmoor. A strange story, without much detail as with much that is associated with this institution.

One earlier Governor was Montagu Norman. He was in charge from 1920 to 1944. He went to Eton and had one year at Cambridge University. After that it was banking all the way. So during the Depression of the 1920’s and the years leading up to and during the Second World War and for a total of twenty four years there was, in charge of the central bank of the United Kingdom someone with no experience outside of being part of a bank, having started with Martin’s, a private bank, where he had relations. It was during his period of office that the Gold Standard was abandoned, in 1931. In 1939 £6,000,000 of gold belonging to Czechoslovakia was transferred to the German Reichsbank. He was also a Director of the Bank for International Settlements, which still exists based in Switzerland, and was a member of the Anglo-German Fellowship, a pro-Nazi organisation which included a number of English and German businessmen, military and another Director of the Bank of England, Frank Tiarks. This group was founded by Ernest Tennant, of whom all I know is that he was a merchant banker and was a friend of Von Ribbentrop, the senior Nazi ‘ diplomat.’

He may have been a maverick, yet he was in charge for 24 years, and the details of his actions seem deliberately vague and his connections deeply disturbing.

There is a moral vacuum at the centre of the City. It is given too much respect and has too much power. It is fundamentally lacking in transparency and appears to have no social motivation whatsoever. It is a collection of competing commercial interests. It has no conscience. As the Bank of England is to be given an increased role in controlling the financial operations of this market then its basic principles need to be spelt out in language that can be readily understood. Its purpose and responsibilities need to be clearly defined. Yes, a fine was handed out to bankers JP Morgan, a large sum but clearly manageable, and the salary of the Governor was revealed, £300,000 a year. But sadly, I see no sign of any serious re-evaluation of what they are there for, which clearly should include some recognition of a responsibility to the so-called big society that it should serve rather than remain locked into the obscure, closed and self serving world of the City.