Gordon Brown in the Dock

Posted on 25 September 2007 by Ray Boulger

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In his Conference speech yesterday Alastair Darling referred to the Northern Rock situation and said: “No government should ever be in the business of protecting executives who make the wrong call or bad decisions.”

I absolutely agree with that but would go further and say that should also apply to Government Ministers, however senior they are.

I wonder if Mr Darling read Anatole Kaletsky’s Economic View, entitled “The MAD world of tripartite regulation” in yesterday’s Times. At his inquisition by the Treasury Select Committee on 20 September Mervyn King stated that the reason he hadn’t been able to use covert action to help Northern Rock was the effect of the Market Abuse Directive (MAD) and its interaction with 3 other British laws. The EU quickly denied that their MAD would have prevented this, but of course the Bank of England’s view was based on their legal advice.

In his article Mr Kaletsky has neatly solved these apparently conflicting opinions. He points out that the EU MAD was “gold plated” by the Treasury before implementing it into British law. This was in 2004 – 5, at the same time as Gordon Brown was promising to end such unnecessary “gold-plating” of EU Directives. Thus the reason the Bank of England was unable to follow its preferred course of action was not the EU’s fault at all, but resulted from Gordon Brown’s dept gold plating an EU Directive, which was bad enough, but worse still without understanding the implications.

Thus the person primarily responsible for the Bank’s problem was the Head of the Treasury at the time, one Gordon Brown. This may help to explain was the Prime Minister was so profuse in his praise of Mervyn King, assuming by then he had realised it was all his fault.

In the light of this perhaps Mr Darling would tell us if he agrees that “No government should ever be in the business of protecting Ministers who make the wrong call or bad decisions.”

Category: Bank of England, Regulation

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