MPS accused the Bank of England of lobbying the Treasury to avoid proper scrutiny during a frosty hearing yesterday.
The Treasury Select Committee (TSC), led by Andrew Tyrie MP, said the Bank is proposing an oversight committee for itself with a overly limited remit. Bank governor Mervyn King said he found the view “extraordinary”.
The Bank is fighting back against MPs’ accusation that it is too unaccountable, suggesting an oversight body for itself to judge the decision-making “process” but not the decisions themselves. John Thurso MP dubbed it “a committee [to] determine whether all the wrong decisions have been taken correctly”.
King hit back that the MPs want “another group of unelected officials... to second guess the decisions of the first group”. But Michael Cohrs, a Bank non-executive director, agreed with MPs, saying he “can’t think of a reason” to limit the oversight body’s remit. Cohrs also admitted that there “probably should be” an investigation into the Bank’s role in the financial crisis.
King proposed that its role should be clarified by a “memorandum of understanding” between the Bank and the Treasury and assured the committee they would be “very pleased” with it. But he incensed MPs by refusing to divulge any details. They argue the roles should be laid out in legislation. “I watch with suspicion this memorandum,” said George Mudie MP.
King also criticised bank bonuses.