LONDON (MNI) – The author of a review into the Bank of England’s
liquidity operations at the height of the banking crisis has said that
BOE staff avoided submitting policy proposals that they thought would
challenge their superiors’ views.

In an appearance before the UK parliament’s Treasury Select
Committee, former JP Morgan CEO Bill Winters said that although there
was no ‘active stifling’ of debate at the BOE, bank staff did feel under
some pressure to submit ideas that they thought would meet with approval
from senior staff.

“It became clear to me that there was, particularly during the
crisis, perhaps it was before the crisis as well, a tendency for the
staff to ask the question what’s going to get through? and if it’s not
going to get through let’s not put it up because, one, we won’t get any
action or at least we won’t get directionally the action that we want
and, two, in some cases it may not be good for us from a career
perspective,” Winters said.

“As far as I noticed there was no active stifling of dissent at
all… what they did though was effectively filter or preselect a range
of recommendations to bump up the line that they thought had the
greatest likelihood of getting through,” he said.

Winters also said that he thought his report is being taken very
seriously by the BOE, but added that the BOE is concerned that
implementing all of the review’s recommendations would be too radical.

“My impression is that the Bank has taken the report very
seriously. That they will duly consider each of the recommendations,
that they’re concerned that the aggregate effect of all the
recommendations is too radical and that if the bank or the court went to
the extreme in each of the recommendations that I made, cumulatively
that could be too much,” he said.

Three reviews into the BOE’s performance and capabilities were
commissioned in May by the Court of the Bank of England.

They focused on the Bank’s handling of emergency lending and
liquidity at the height of the financial crisis, its forecasting record
and its ongoing plans for providing support to the banking sector.

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