Any Other Business | 25 April 2009

Eddie was a model public servant: that’s why Gordon was so rude to him

In Tokyo in the mid-Eighties, I bumped into a very senior Japanese investment banker who had just been to London to negotiate an operating licence. ‘We met…’ he paused for effect, bowing slightly at the neck and adopting what I can only describe as obsequious grimace, ‘…Eddie-George-san!’ All the other Japanese present nodded vigorously and sucked their teeth in accord. Lord George, who died last Saturday aged 70, was a big player on the world banking stage long before he became Governor of the Bank of England in 1993. He was also a model public servant: modest, calm, courteous, firm-principled, and a master of market technicalities. It was perhaps because he was so respected by everyone else that he was treated so brusquely by Gordon Brown, whose ‘tripartite’ regulatory structure — which removed the ‘banking supervision’ role from the Bank and handed it to the FSA — was imposed without consultation a few days after the 1997 election. Only George’s career-long loyalty to the Bank stopped him resigning in fury. Brown’s reform was presented at the time as a response to the Bank’s weak handling of BCCI and Barings; but with hindsight, we can see it as a characteristically paranoid manoeuvre to weaken the Governor’s power-base, lest it should threaten Brown’s own. And we have seen the long-term consequences, in the failures of regulatory oversight at Northern Rock, HBOS and Royal Bank of Scotland.

My predecessor Christopher Fildes warmly recalls Eddie George’s last Mansion House dinner as Governor in June 2003 — alongside Brown, who was received with formal politeness despite his refusal to respect his hosts’ dress code. The Governor ended his gracious speech with a joke about making the transition from Who’s Who to ‘Who’s he?’ — and the assembled City rose to its feet and cheered him for a full five minutes.