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BoE delays response to crisis reviews

The Bank of England will not give a full response to internal reviews of its handling of the financial crisis until a new governor is chosen, who is likely to take a different view on some recommendations than Sir Mervyn King, the incumbent.

The reviews into a limited set of operational problems thrown up by the financial crisis will be published in the next few days after being discussed at the October meeting of the court - the BoE's oversight body.

According to insiders, fears of a whitewash are unfounded and recommendations contained in the reviews are likely to form a central part of the pending interviews for the soon to be vacant position of governor.

The three reviews commissioned internally by the court - into operations at the height of the crisis in autumn 2008, banking liquidity operations and the BoE's forecasting procedures - drew criticism in May for avoiding many contentious issues.

The terms of reference specifically excluded examination of senior management's attitude to the bank's formal responsibility for system-wide financial stability before the crisis, the BoE's hierarchical culture and its stuttering initial response to the crisis in 2007.

The third review into the BoE's persistent forecasting errors has examined the source of the mistakes and is likely to shine a light on the Monetary Policy Committee's forecasts - something the BoE vehemently refused to do until this year.

The bank guards the secrecy behind its forecasts so tightly that the Treasury first stalled and is now blocking a Financial Times freedom of information request into the details of a historic BoE forecast held by government officials.

The Treasury said any publication of material that the BoE likes to keep behind closed doors "would undermine the government's working relationship" with the bank.

Although many MPC members believe the BoE's secrecy damages transparency and public understanding, the Treasury warned the FT that revealing anything from the February 2012 forecast might lead the BoE to refuse access to information in future.

"There is no statutory requirement on the BoE to provide this information and disclosure would discourage the BoE from sharing information with the UK government in future," the Treasury wrote, highlighting officials' concerns that under Sir Mervyn King, the BoE, would prefer not to share information with government rather than let any historic internal statistical information be published.

Some MPC members hope that the BoE will become much more transparent with its forecasts under a new governor next year, learning lessons about the benefits of transparency in explaining thinking from the Office for Budget Responsibility.

The reviews will be published before a meeting of the MPC next week, which will decide whether to keep printing money and adding to the £375bn pile of government bonds held by the BoE under its quantitative easing programme.

Two of the leading candidates for governor - Paul Tucker, a deputy governor of the BoE and Lord Turner, chairman of the Financial Services Authority - have already seen and discussed the reviews in their positions as members of the BoE's court, which met on Friday to discuss the reviews.

The three favourites for the governorship - Mr Tucker, Lord Turner and Sir John Vickers, former chairman of the independent commission on banking - will shortly be interviewed by a panel of Treasury civil servants.

The Treasury interview panel will include John Kingman, second permanent secretary to government who has recently returned to the Treasury from the private sector.