Furse First!

Dame Clara Furse was the first woman to be appointed on the Financial Policy Committee of the Bank of England. But, that’s not the only first she managed to get in line for. She was also the first member to get a grilling by the Treasury Select Committee over her suitability regarding that appointment.

Since it’s always third time lucky, British MPs have now asked for there to be an inquiry held as to the impartiality and independence of that appointment of Clara Furse. It doesn’t look like Furse has been given the complete green light yet on her appointment and she may have to answer further questions by British MPs.

Furse was questioned over her role and decision-making policies when she sat on the committee of the financial firm Fortis, which ended up having to be bailed out after the financial crisis in 2008 by not one but three countries’ taxpayers: Belgian, Holland and Luxembourg. There was a total bailout of €11.2 billion (US$16.3 billion). Now only the insurance sector remains for Fortis.



Furse was a non-executive director of Fortis, which in conjunction with the Royal Bank of Scotland and Santander bought out ABN Amro in 2008. It was the biggest take-over in the banking sector until that date. Fortis and the Royal Bank of Scotland came in for a very rough ride when the money that they had both put up to finance the acquisition ate into bank deposits. The financial crisis hit at just the same time. As a result, the taxpayer had to step in and save the banks from disastrous decisions that had been taken. By the time the financial crisis had hit, and due to depletion of deposits, Fortis was worth just 1/3 of its original value. It had previously been the 20th largest bank in the world in terms of revenue.

Apparently she was described by one MP as ‘amazingly unimpressive” during the Treasury Select Committee interview. Wow, and she still got the job? When asked whether she thought that the Financial Policy Committee should have the necessary power to put into place tougher leverage ratios, as a measurement of the risks being run by banks, she replied that she thought that they were ‘unnecessary’.

Her answers did not entirely convince the committee that the FPC would be able to act in an independent way from government pressure and that seems like it has come as bad news for her and her appointment on the Committee as now she will have to be answerable to the MP probe that is going to take place.

But, it looks like the inquiry that is to be held is also unhappy with other appointments that have been made. Notably, the skills and knowledge of former Goldman-Sachs banker Richard Sharp

Richard Sharp

Richard Sharp

have also been brought under scrutiny. It turns out that he needs to brush up a little on his technical knowledge. Not surprising really judging on Goldman Sachs past record on the improper practices that brought us all down in the global financial crisis, is it really?

There are questions being raised as to the accountability of the FPC and the independence of their decision-making as well as whether or not Furse is the right person for the job. Given her past record, it’s debatable.   Furse wouldn’t have been the first choice of most people, would she really?Furse was also the Chief Executive of the London Stock Exchange (2001-2009). The Financial Policy Committee identifies and counters financial risks in the UK banking sector and growth prospects in the UK.

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