How the Governor lost his eyebrows

‘Bank of England denies NatWest rescue move,’ screamed an Evening Standard headline in December 1974 as the credit squeeze strangled the clearer most exposed to the secondary banks that were falling like dominos. This month the Bank has been denying it has just rescued Barclays: the £1.6 billion lent at short notice was not an emergency loan, it insists, simply the use of a strategic safety valve.

Just as well, because it is no longer the Bank of England’s job to go round rescuing banks that run out of money. When Gordon Brown put the Bank in charge of setting interest rates a decade ago he took away its role as the supervisor of the banking system. The Governor at the time, Eddie George, did not think much of the idea, but having allowed the secondary banks to boom until they bust and let Johnson Matthey and BCCI slip through its hands, the Bank might well have thought supervision an impossible task best handed over to the clever-clogs at the new Financial Services Authority.