Today the Bank of England should be taking centre stage with its forecasts for UK economic performance in and at its Quarterly Inflation Report. Unfortunately for the Bank, some of the demons of its past have hit the news wires only a few hours before it was due. Here we have the relevant announcement from the UK Financial Conduct Authority:
The G10 spot FX market is a systemically important financial market. At the heart of today’s action is our finding that the failings at these Banks undermine confidence in the UK financial system and put its integrity at risk.
Okay, and so the action is?
The Financial Conduct Authority (FCA) has imposed fines totalling £1,114,918,000 ($1.7 billion) on five banks for failing to control business practices in their G10 spot foreign exchange (FX) trading operations: Citibank N.A., HSBC Bank Plc, JPMorgan Chase Bank N.A., The Royal Bank of Scotland Plc, and UBS AG.
This is rather awkward for the Bank of England in its role of supervisor of such markets.
Of course this doubles up its “hear no evil, see no evil, speak no evil” attitude to LIBOR interest-rate fixing. In other words, the politest way of putting these events is that it was asleep at the wheel. In truth we need to add to that the reality that it was given warnings but did not act on them. It is hard to see how a regulator could have failed more comprehensively.
Never fear there has been an enquiry!
The enquiry has already found that the Bank of England is innocent:
No Bank of England official was aware that this improper behaviour was happening.
We are left wondering what were they doing then. But then of course we are reminded of the words of Otto Von Bismarck and Jim Hacker of Yes Minister.
Never believe anything until it is officially denied.
It would appear that these places never run out of whitewash! As to possible rewards for the report’s author, well, Anthony Grabiner QC is already a Baron, so we will have to see.
Oh, and we only had to wait until around 9:30am (just be chance at the same time as the labour market statistics) for there to be something of a change. From the Wall Street Journal:
The Bank of England has dismissed its chief foreign-exchange dealer for breaching internal policies..
It has been a busy 24 hours for people with such titles as it was only yesterday that I was analysing the proposals of Baron Adair Turner. It would be remiss of me to point out that the fines imposed above cover the period below which is pretty much his tenure as chairman of the FSA:
We found that between 1 January 2008 and 15 October 2013…
Perhaps he will soon write another opinion piece in the Financial Times as yesterday’s might just be seen (by cynics) as a smokescreen..
I am reminded too that the Bank’s Deputy Governor for financial stability over most of this period was Paul Tucker. If you simply google his name and LIBOR there will be rather a lot of entries! The same Paul Tucker was also in charge over the period of FX manipulation too. Of course the official story is different:
a towering contribution to the international economic community……Paul Tucker has done an outstanding job……he’s done a really good job
His New Year Knighthood was for services to central banking so we wonder exactly how that was defined?! They were however ‘valued’ – the accounts of the Bank of England valued his pension pot at just over £5.7 million!
This a slightly edited and abridged version of Shaun’s irreverent post today in his Notayesmanseconomics Blog