The Bank of England has recently found itself accused of “taking far more money from people’s pensions than Robert Maxwell ever did” because of the impact that QE has had on annuities.

It’s not difficult, then, to imagine the uproar from the younger and poorer members of society if the Bank was to ban people getting a mortgage unless they can stump up, say, a 25 per cent deposit.

The lobbyists for the young and poor are less powerful than those serving the interests of the old and rich. Still, one suspects a raft of bad press about how the unelected (and well paid) technocrats that inhabit Threadneedle Street were preventing Mr and Mrs Smith from “getting on the property ladder” — long considered a rite of passage in British life — as the likely result of caps on mortgage lending.

With this in mind, the Financial Policy Committee, the Bank of England body charged with safeguarding stability, today resisted recommending that it be given the power to limit borrowing by would-be homeowners as part of its toolkit to stave off future financial crises.

Such caution in avoiding negative PR is wise for an institution under fire for a lack of public accountability.

But the problem is that the evidence suggests limits on loan to value, or loan to income, ratios for mortgages are by far the most effective tools in preventing financial crises.

Even the Bank’s own research suggests that the effectiveness of two of the three tools that the FPC wants to use instead of caps on mortgage borrowing is mixed at best.  Read more

The news of Hector Sants’ resignation on Friday came as a shock. But the reason for his departure – frustration at the progress of the integration of the Financial Services Authority into the Bank of England – should come as little surprise.

Integrating the FSA’s prudential regulators into the Bank was always going to be fraught with difficulty.

One problem that officials with experience of both the FSA and the Bank often mention is of trying to reconcile the cultural differences between regulators, who are often better paid, and economists, some of whom regard themselves as intellectually superior.

Having Mr Sants fill one of the three deputy governor seats at the Bank (and head the Prudential Regulation Authority) would have gone some way to reconciling those differences.

Who will speak up for the regulators now? Read more