Wednesday, 17 September 2008
Blunt Instruments ... in the Hands of Incompetents
Today the remarkably well-informed Robert Peston writes:
"The government will announce that in the interests of financial stability it will legislate to over-ride the powers of the OFT and the Competition Commission to block the [Lloyds / HBOS] deal"
Let us set aside the obvious point that Brown may be lying about this (just as he has failed to legislate the promised extension to the guarantee for bank depositors' money).
The bigger issue is how this hanky-panky is being perpetrated: with a very public admission that something smelly is being contemplated, and the threat - possibly an idle one - to legislate sine die to crush all legitimate impediments in its path, thereby enshrining illegitimacy, demoralising the regulators, and reinforcing the air of anarchy.
Don't get me wrong, I am all for decisive, worldy-wise actions when they are called for, as described here last week. And I am also for giving regulators stern mandates and plenty of backbone, a theme I shall return to. However, in this instance the way it should have been done was a quiet word with the OFT and Competition Commission, along the following lines:
* * *
Chaps, we are all of one mind on the unacceptability of dominant market positions. However, the key objective just now is to keep the bicycle upright. When we all notice in a couple of years that one particular bank has become a little too dominant for all our likings, you'll be set on to write one of your big reports, and we'll slim the Big Boy down in the usual manner, get my drift ?
In the meantime, let's find a form of words to waive this one through, shall we, without prejudice to any of our powers to sort things out properly in quieter times. (Ofgem does this all the time, doncha know, when it's asked to give waivers on third-party access rules in big new energy infrastructure investments. Let 'em build it first !, that's the motto, and we'll straighten things out later. You won't get them to part with their money otherwise, eh ? Works every time ...)
* * *
But no: we have the most senior government ministers crashing around with blunt instruments in hand, smashing everything in the chinashop, probably falling foul of the EC - see Hatfield Girl here, and bringing the game into disrepute. This is categorically not the way.
Posted by Nick Drew