Tyrie attacks Bank of England crisis conflicts

“The executive rarely acknowledged possible weaknesses in its views or, other than grudgingly, admitted that it might have been unprepared for the crisis.

“The Court was almost entirely reactive: there is hardly any sign of its non-executives coming forward with suggestions or constructive challenges to the assumptions of the executive.”

Mr Tyrie stated that the non-executives appeared to be particularly anxious about their own positions in June 2008 when they considered how they might respond to a Treasury Committee request for a paper on the court’s role in relation to financial stability.

“Understandable though these instances of back-covering may have been, the non-executive directors appear to have done little thinking of their own about financial stability and to have added little or no substantive value to the bank’s work on it.

“They may have achieved the opposite: before the crisis, they reinforced the bank’s mistaken decision to downgrade financial stability; during the crisis they consumed the bank’s time with their demands for more information in an attempt to cover themselves.”

The chairman of court Anthony Habgood said that the minutes highlight the importance of the role of Court in ensuring the Bank is robustly governed.

“While successive reforms in recent years have significantly enhanced Court’s capability to hold the Bank’s executive management to account, there is scope to go further, with a simpler structure and a clearer commitment to accountability.

“As chairman of the Bank’s board, I will do my utmost to ensure that the bank is open, accountable, trusted and above all, well-governed.”