Bank of England’s handling of financial crisis to be scrutinised in reports

The Bank of England’s handling of the financial crisis will face fresh scrutiny this week when three reviews commissioned by the central bank are expected to be published, reports The Guardian.

The reviews were commissioned in May when the Bank remained the only major institution not to have been subjected to a formal review process after the Financial Services Authority (FSA) and the Treasury were both criticised in separate reports.

At the time the Bank’s court – akin to a board of directors – promised that the reviews would “pay close attention to the most intense period of the financial crisis in 2008-09 that included the collapse of Lehman Brothers in the United States in September 2008, the recapitalisation of the major UK banks and the deep global recession”.

When the reviews were announced, the Bank said they would be presented to the court in October and eventually published. They were presented to the court last week, clearing the way for their release. The Bank of England would not comment.

Three separate five-month reviews were commissioned. One was into the way liquidity was provided to the Royal Bank of Scotland and HBOS in 2008 and 2009, another into the Bank’s general policy about providing liquidity to the financial system and a third into the forecasting capabilities of the monetary policy committee.

Their findings will be released at a time when the successor to Sir Mervyn King, governor of the Bank of England, is being selected and just as the government is preparing to hand the Bank sweeping new powers to oversee banks and insurers as well as a key role in securing financial stability.

Before the reviews were commissioned King had said he was “baffled” at the need for any inquiries but has also said he wished the Bank had “shouted from the rooftops” about its concerns before the crisis.

The review into the emergency liquidity assistance for RBS and HBOS was handled by Ian Plenderleith, who spent 36 years at the Bank before retiring in 2002.

The review into the way the Bank’s money market operations functioned was run by Bill Winters, a member of the Independent Commission on Banking. The Bank’s forecasting record was scrutinised by David Stockton, a former chief economist at the US central bank, the Federal Reserve, and a senior adviser to the former Fed boss Alan Greenspan and current head Ben Bernanke.

The Bank has said it would look for lessons from the reviews and has already begun to respond to some concerns raised by politicians and commentators about its new powers by announcing that a new chief operating officer would be appointed to help run the growing operations.

The FSA has published a number of reviews into its approach to regulation during the crisis and will be disbanded next April when the Bank will become responsible for banking regulation through a new Prudential Regulation Authority. A Financial Conduct Authority will remain in the FSA headquarters to oversee other aspects of regulation.

A new governor is expected to be named on 5 December, the day of the autumn statement. The deputy governor Paul Tucker, FSA chairman Lord Turner, head of the Independent Commission on Banking Sir John Vickers and MEP Sharon Bowles are among those known to be candidates.