Privileged libels
THE morally hazardous business of John- son Matthey Bankers hit the Governor of the Bank of England's out-tray, to a sigh of relief which registered on the Richter scale. It had exposed him to the type of political scatter-gunner satirised by Donne: He, like a privileged spy, whom nothing can
Discredit, libels now 'gainst each great man. The discredit of those privileged libels should itself be recorded. There was no misconduct by the team which the Bank put into JMB. There was no tax offence disclosed by the Customs raid (though JMB people would like to know how the television cameras came to arrive before the excisemen). There was nothing wrong with the bullion business, which has been sold at a premium. There was no loss to the taxpayer, and JMB's tax-losses, which for long had seemed its best asset, will not now be claimed. The cost to the Bank and its fellow lifeboatmen will depend on the final worth of JMB's loan portfolio (which the Bank expects to respond to quiet nursing) and on the claim against the auditors: it is conceivable that there will be no loss at all. There had been incompetence and gullibil- ity and indiscretion in the old JMB, and at least one instance of misfeasance (a clerk was caught and sacked). Slackly run banks attract fraudulent customers. It should have been spotted by the Bank. Should it have been rescued? Merchant bankers who by their own account were screaming at the Governor to save JMB now argue that a spot of moral hazard would have encour- aged the others no end. We shall never know — but Bagehot still rules at the Bank.
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