HECTOR Sants warned yesterday that the new Bank of England head will have an impossible job to do, thanks to laws passing through parliament that hand power over financial stability and banking supervision to the governor.
“We could be concerned that the operational task given to the governor as an individual – of course that will be a new governor by the time the reforms come into place – is just too great,” said the outgoing chief exec of the FSA watchdog. “I think the risk is that operationally this is going to be too difficult for one person to manage.”
The plans to give the governor extra responsibilities have already been criticised by the Labour party, with shadow chancellor Ed Balls and predecessor Alistair Darling saying the new boss needs to be “superhuman” to fulfil his duties.
Sants also claimed yesterday that the bank run on Northern Rock could have been prevented if the Bank of England had taken his advice.
He said it was “a pity” that the Bank refused to help Lloyds to buy struggling Northern Rock in 2008.
“I think that would have made a difference, it would have avoided the queues at Northern Rock and it would have changed the general climate in relation to the old building society sector that had moved into the banking sector,” he told the BBC in an interview.
Sants also argued that UK banks are hoarding cash because of market pressures, rather than due to regulatory burdens as the firms themselves have claimed.