They described the relationship between the Financial Services Authority, the city watchdog, and the Bank of England as “dysfunctional”.
Political interest in the appointment of the new governor has risen because the Bank of England is taking on regulatory roles from the Financial Services Authority.
It will also have the be able to intervene in the supply of credit and lending to households and companies.
The changes have led some observers to say the next Governor will be one of the most powerful unelected officials in Britain, and one of the most influential central bankers in the world.
Nick Clegg, the deputy Prime Minister, and Danny Alexander, the Chief Secretary to the Treasury, want a say in the appointment.
The Lib Dems point out that under the Coalition Agreement for Stability and Reform, published in May 2010, “on the issue of public appointments, the Prime Minister will consult with and have regard to the views of the Deputy Prime Minister.”
A senior Lib Dem source said that the appointment was “probably the biggest single appointment the Coalition Government will make, so naturally the Liberal Democrats will be involved in the decision”.
The source added: “The role of the Governor of the Bank of England is always important but given the state of the economy it’s particularly
pivotal at the moment and will become even more so as the Coalition’s reforms mean that the Governor has a central role in financial services regulation. It’s crucial we get this decision right.”
Lord O’Donnell, the former Cabinet secretary, could be overlooked because of a difficult relationship with Prime Minister David Cameron in the months before his retirement last year.
PaddyPower, which is running a book on the successors, has Lord Turner at 7/4 favourite followed by Lord O’Donnell (9/4) and Mr Tucker (5/2).
Lord Turner of Ecchinswell, 56
Current role: Chairman of the Financial Services Authority
As chairman of the FSA since May 2008, he is experienced in City regulation. But he was criticised for overseeing the near collapse of several banks during the financial crisis. He is suspected of being ‘unsound’ on Europe by Conservatives as a former cheerleader for the UK joining the euro.
Odds 7/4 Favourite
Lord O’Donnell of Clapham, 60
Current role: Former Cabinet Secretary and ex-head of the Home Civil Service
Lord O’Donnell served as Cabinet Secretary and head of the Home Civil Service under three Prime Ministers between 2005 and last December. As Sir Gus O’Donnell he was known by his initials “GOD” in Whitehall. He has represented Britain at the International Monetary Fund and World Bank. At the Treasury, he was head of the Government economics service and managing director of macroeconomic policy.
Odds 9/4
Paul Tucker, 54
Current role: Deputy Governor of the Bank of England
Mr Tucker was the clear internal favourite after emerging from the financial crisis with a strong reputation as a City problem solver. However his stock dived during this summer’s Libor scandal. In July 2012, a memo suggested that Mr Tucker may have implicitly pressured Barclays to manipulate its Libor submissions. In email conversations he also described former Barclays chief executive Bob Diamond – who had to resign over the affair – as a “brick”.
Odds 5/2
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