Nick Macpherson was interviewed by the FT, and, amongst other things, pointed out that the financial stability team there was ‘quite small’ before the financial crisis hit, using the number 20.  Alex White from the Economist Intelligence Unit tweeted that quite small really meant 1.

Whether 1 or 20, this is relevant for the debate, begun by Simon Wren Lewis, about whether the Bank of England should remain independent given that it failed to avoid the financial crisis.

This small team reflects the fact that there was, as Nick put it, a ‘collective intellectual failure’, crossing both sides of ‘town’, ie the Treasury and the Bank.  Had the Treasury the insights it had now, it would have something like the resources devoted to financial stability that it has now.  [100?]  And, as I pointed out in the previous blog on this topic, the banks would be confronted with the same regulatory edifice [FPC, a reformed Basel accord, resolution procedures, etc etc] that we have now, whether administered by the Treasury or the Bank.

Without Bank of England independence, the financial crisis would have played out as it did, unforeseen by the ‘small team’ at HMT, who, one would guess, were pray to the same intellectual failures that afflicted people like me at the Bank of England.