Two ex-bankers and a trade unionist will join the Bank of England's supervisory board on June 1, Britain's finance ministry said on Wednesday, replacing retiring non-executives at a time when the BoE is drawing increased political scrutiny.
However, the new faces on what is known as the BoE's 'Court' have a similar background to their predecessors and are unlikely to assuage criticism of the body from politicians who believe it has failed to hold Governor Mervyn King to account.
Earlier on Wednesday, lawmakers on the British parliament's influential Treasury committee gave details of an inquiry into whether the BoE was accountable enough to wield sweeping new powers of financial regulation due to come into force next year. Treasury committee chairman and Conservative legislator Andrew Tyrie has criticised the Court for failing to investigate King's behaviour at the start of the financial crisis in 2007 when Britain suffered its first bank run in a century.
At the time of the collapse of Northern Rock, the BoE shared supervision with the finance ministry and another regulator, but from next year the BoE will take the primary role. "The Government is handing the Bank of England unprecedented powers," Tyrie said. "That is why it is important that we sort out the Bank's accountability to Parliament and the public. The Government's proposals ... simply aren't good enough."
The three new members of the Court are Dave Prentis, general secretary of Unison, Britain's biggest public-sector trade union; Bradley Fried, a former partner at management consultants McKinsey and ex-chief executive of Investec; and Tim Frost, who spent most of his career at J.P. Morgan and now chairs financial data company Markit.
Frost is a fund raiser for the ruling Conservative Party, while Prentis is a Labour Party activist. They replace Trades Union Congress general secretary Brendan Barber, AIA Group insurance chief executive Mark Tucker and Commonwealth Bank of Australia non-executive director Harrison Young, whose terms are ending, in Young's case two years early.
Separately, the finance ministry said it was advertising for a successor to Adam Posen, a member of the BoE's rate-setting Monetary Policy Committee who steps down at the end of August to head a major US economic think tank, the Peterson Institute. Posen has been one of the most publicly dovish voices on the MPC for most of his tenure, and was the main proponent of further asset purchases by the central bank. "Candidates must demonstrate that they have used their economic expertise operating at a very senior level in business, financial markets, a policymaking environment or academia," the finance ministry said in the advertisement.
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