Mervyn King gets a bit turned around in Westminster

A few days ago, Private Eye (no. 1216, 8th-21st August), ran a story talking about Mervyn King managing to land himself in hot water in front of the Treasury Select Committee. Here, for your amusement and edification, is the full transcript from Hansard of what transpired in those few minutes:

Jim Cousins: We are now getting a picture of quite a complex process and you yourself have referred this morning and on other occasions to the importance of communication, and you have made it clear that you do not think this amber state, if we are going to use your terminology, should be communicated, but has there ever been any formal inquiry as to how the leak which caused the run on Northern Rock ever took place? Has there been any formal inquiry into that at any stage by anyone?

Mr King: As far as I know no institution has instigated a formal inquiry, no.

Jim Cousins: Governor, do you not accept that there is a certain moral hazard, if I can use that term, in not carrying out such an inquiry into how that happened because in the absence of such an inquiry how do we know that all these discussions that will be going on in the amber phase between a whole variety of different people in your two organisations, involving the Financial Stability Committee, will not be leaked?

Mr King: All I can say is that if you would like to hold your own inquiry into what happened you would be very welcome to. I do not think any leak inquiry has ever produced a very productive result, and I think it is pretty clear where leaks tend to come from.

Jim Cousins: But, Governor, this Committee is not the appropriate agency to do that, as you know perfectly well, and you must also appreciate, Governor, because you yourself used the term "moral hazard" on a regular basis, quite properly, that if significant leaks occur and no inquiry is made into those there is an element of moral hazard that results.

Mr King: I am absolutely convinced that no leak emanated from the Bank of England. I have no idea where the leak came from. Others can ask themselves that question if they want to.

Chairman: Governor, I thought you said it was pretty clear, you thought, where the leak came from. Did I hear you wrong?

Mr King: No, I did not say that.

Chairman: What did you say was pretty clear then?

Mr King: I said leaks in general are those things which you are more expert in than those of us in public bodies. I think you are much more expert in where these things originate from and how they come out.

Jim Cousins: I am sorry, Governor, this is a serious issue.

Mr King: It is a serious issue.

Jim Cousins: It is too important for that kind of by-play. You know perfectly well the credibility of this system will depend on an absence of leaks.

Mr King: I have given you an assurance that no leak came from the Bank of England in any respect of any issue in the last year that has come up. There are a number of issues where leaks have occurred, where things have reached broadcasting authorities. None of it came from the Bank of England. I cannot carry out any investigation into a leak from any other authorities.

Jim Cousins: But, Governor, what are we on this Committee and in Parliament when we consider this legislation to make of a system where there are inquiries into bottom feeders' leaks, young men at computer terminals, but there are no inquiries into top people's leaks?

Mr King: What top people's leaks are you thinking of?

Jim Cousins: What occurred last September.

Mr King: I suggest you ask the other authorities involved what they have done about it.

Jim Cousins: Thank you.