“WE protected the shareholders,” cried one regulator.
“We were making clear the public’s anger,” called another.
“But what were you actually regulating?” asked the MP.
“Well, that isn’t our job,” came the inflammatory reply.
So it came to pass that yesterday the Treasury select committee (TSC) dug a little deeper into the roles of the Bank of England and the Financial Services Authority: apparently not to stop problems when they build up, nor to keep the system safe, but to force out bad bankers when it all gets too embarrassing.
The war of words escalated rapidly as the nature of regulators’ involvement in Bob Diamond’s resignation became clear.
“You handed the chairman of Barclays a revolver and told him to shoot the chief executive,” said TSC chair Andrew Tyrie.
“I told Marcus Agius what they had to think about as a board,” replied FSA boss Lord Turner in less dramatic language.
But Tyrie was not convinced, pushing Turner to concede that Agius “took the revolver and shot himself”.
“It was not what I was expecting, or the most sensible decision in the circumstances. But it was an honourable decision,” said Turner.
Tyrie’s violent choice of words showed his disgust that the FSA and Bank of England could tip CEOs out of a job so easily, but King’s response implied it was nothing he wouldn’t do again – insisting he had spoken to a legal adviser and acted for both shareholders and stability.
The governor then tried to argue that it was also his duty to explain to the Barclays board that they had lost the confidence of regulators – while simultaneously pushing the point that the Bank of England was not a regulator and so should not have investigated Libor in the first place.
With that clarified, King also rallied against Tyrie’s choice of metaphor: “I don’t like these firearm analogies, and they are false,” he told the angry MP.
Unsurprising, perhaps, from a man better known for his seafaring references.