June 19, 2008 | posted by Michael Baxter in Banking |

Oh well, unemployment might be rising, but at least we know of two jobs going.

The search is now on, not for one, but for two deputy governors at the Bank of England.

Rachel Lomax’s stint as deputy governor comes to an end this month, and Ms Lomax has said she doesn’t want to renew it. 

Then yesterday, the other deputy, Sir John Gieve fell on his sword, well at least he said he was to step down next year.

He was the gentleman at the Bank of England responsible for financial stability, and when that whole Northern Rock thing blew up was in the firing line.  He got a right grilling too, at the hands of John McFall, chairman of the Treasury Select Committee.

Sir John said: “In recent months I have been leading work in the Bank on a new and better framework for financial stability. I fully support the new proposals and, in particular, the enhanced role for the Bank of England.

“Once the legislation is in place, building up the new capabilities in the Bank will require a long-term commitment. It makes sense for someone else to take on this task who is prepared to commit himself to a full five-year term. I have decided therefore to step down at that point. I would not wish to serve another five-year term at the Bank.”

John McFall, said: “This is unexpected in light of the turbulence in the money markets and the importance the Governor has attached to financial stability. It is the signal for a new start and I hope and expect that it indicates financial stability is the number one priority.”

Bank of England watcher Oscar Wilde said: “To lose one deputy governor, Mr Darling, may be regarded as a misfortune; to lose both looks like carelessness.”

Talking of carelessness, it seems central banks may have been too lax earlier this decade.  Who said? Why, none other than steady Eddie himself, Lord Eddie George, the governor at the bank from 1993 to 2003.

Speaking at  the Politeia economic forum in London, he said: “In the face of the economic slowdown in the industrial world in the early years of the decade – when inflation was generally in pretty good control – official interest rates, generally, were reduced to abnormally low levels.

“What we perhaps didn’t anticipate were the wider financial market consequences of what came to be called the search for yield.”

He said: “Rapid rise in household debt and rapidly escalating house prices in many countries,” may have been the result.