Bank of England governance 'defective'
Governance of the Bank of England is "defective", according to the chairman of the Treasury Committee following the publication of three independent reviews into the Bank's performance.
Andrew Tyrie said the reviews were too little, too late.
The reviews, commissioned by the Bank, questioned its "centralised and hierarchical" structure.
They also suggested the Bank paid too little attention to possible individual bank failure in 2008.
"The decision to commission these reviews fell well short of what was required," Mr Tyrie said.
"A comprehensive review should already have taken place, not just to enable the Bank to learn from its past mistakes but also to inform the legislation currently before Parliament.
"The fact that it took so long to obtain even these reports illustrates the Bank's defective governance."
The three separate reviews, commissioned in May this year, looked at the Bank's emergency assistance to HBOS and RBS banks in October 2008 at the height of the financial crisis; the Bank's ability to provide funding to the banking system as a whole; and its forecasting abilities.
The first, by Ian Plenderleith, a former member of the Bank's Monetary Policy Committee, suggested in the run-up to the financial crisis there was greater focus on systemic risks rather than on the potential failure of an individual financial institution.
The report also said the Bank was dependent on the City watchdog, the Financial Services Authority, for information on individual banks' cashflow, but that this data was not detailed enough. It added that Bank was only insured against the loss of 12% of the total amount of money lent to HBOS and RBS - £51.1bn was not covered.
The loans "constituted amongst the biggest risks to the Bank's balance sheet in its history", the report said.
However, it concluded that the emergency assistance "achieved its purpose effectively". Without it, "it is very probable that HBOS would have been forced to cease business within days, and RBS similarly when its sources of dollar funding dried up".
It also said the Bank's decision to disclose fully the extent of the loans a full 14 months after they were made was "reasonable" given the extreme circumstances under which they were made.
Since 2008, there had also been "a significant improvement in the authorities' ability to scan the horizon for impending financial stresses", although Mr Plenderleith said threats may arise from financial institutions other than banks.
The second review, by Bill Winters, a former JP Morgan banker and member of the Independent Commission on Banking, questioned the "robustness" of internal governance at the Bank.
While the report acknowledged that "less senior staff are often willing to challenge their superiors... there appears to be some tendency for them to filter recommendations in such a way as to maximise the likelihood that senior staff will find the recommendation palatable.
"While this makes it easier for the governor, as ultimate decision-maker, to reach conclusions, it risks reducing the range of views he sees and, as such, might lead to a less effective overall outcome."
The report also questioned some of the Bank's programmes designed to provide funding for banks, calling them "stigmatised". This meant banks would only access them "in very extreme circumstances".
It did, however, say that regulation of banks has "progressed materially" and higher capital reserves have reduced, but not removed, the need for central bank assistance.
The final report, by David Stockton, a former director at the Federal Reserve, questioned the forecasting abilities of the Bank, saying they have deteriorated since the onset of the financial crisis, and are not as accurate as those made by external forecasters.