James Forsyth

Bernanke trashes Brown’s tripartite system

Bernanke trashes Brown's tripartite system
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Gordon Brown’s much heralded tripartite regulatory system failed the first time it was faced with a financial crisis, proof that taking away regulatory powers from the Bank of England was a massive mistake. Now, Ben Bernanke — who is trying to secure a second term as Fed Chairman and keep the Fed’s regulatory powers intact — is citing the Brown model as what not to do, telling the Senate banking committee:

"[O]ver the past few years the government of Britain removed from the Bank of England most of its supervisory authorities. When the crisis hit - for example when the Northern Rock bank came under stress - the Bank of England was completely in the dark and unable to deal effectively with what turned out to be a destructive run and a major problem for the British economy.”

As Paul Waugh points out, George Osborne and his team are rather pleased with this effective endorsement of their position by the Fed Chairman. Bernanke’s quote does rather show that Brown isn’t leading the world in quite the way that he likes to claim.