Margareta Pagano: Let’s hope watchdog boss Andrew Bailey has a bite as bad as his bark

At last the City’s got a watchdog that barks. It’s early days, but Andrew Bailey is proving feisty as the Bank of England’s deputy governor in charge of the Prudential Regulatory Authority, (PRA) the UK’s new banking watchdog.

In a remarkably candid interview last week at the Bank’s Financial Stability Report press conference, the deputy governor blamed the bosses of our banks and their private lobbying for contributing to the 2008 financial crash. Indeed, he claims the way lobbying has increased over the past 20 years now threatens to undermine the “stable, accountable and transparent institutional structure” at the Bank’s new prudential regulation regime.

This is dynamite. Put simply, Mr Bailey is saying the UK’s bank bosses are still meddling with the PRA’s new rules and frustrating the regulator’s attempts to make our banking system more bullet-proof.

What’s more, he decided to go out on a limb and give the warning even though the Sir Mervyn King, the outgoing governor, had already done so the day before in his last appearance at the Treasury Select Committee. That he needed to add to Sir Mervyn’s comments that the banks have been lobbying senior ministers for the PRA to “back down” in their demands for banks to hold more capital in direct calls to No 10 and No 11, tells you just how strong this back-door approach must have been.

As well as being feisty, Mr Bailey is also being cute. Instead of just bashing the bankers again, he calls for new ground rules as to how “things are done” in the future. He said: “The very large amount of private lobbying is not consistent with having transparent, accountable and open processes where we can be held to account, the banks can be held to account, and the Government can be held to account.”

That’s telling them. Banks, like any other group of businesses or individuals, should of course be allowed to put their case. Whether you are a student, doctor, farmer or head of a giant mining company, expressing our views and lobbying government officials and politicians is the most basic tenet of representative democracy and at the core of our political process.

Yet the irony is that big business has become more secret in its lobbying while the methods of communication available to them, such as the internet and multi-media channels, should be making us all more open. It’s the oddest state of affairs; you only have to look at the number of so-called experts hanging around Westminster – the PRs and the public affairs consultants who do nothing but spin the views of others for a living – to see how the control of access has become big business itself.

It’s also rather bonkers if you think about it carefully – corporations are paying lobbyists huge fees so that they don’t have to talk to reporters and others about what they really think but let their PR men give an anonymous, watered-down version which no-one believes because they know it’s been watered down. Now it can be a fight to get even a PR man to go on record. All this secrecy is dangerous, leading to Chinese whisper-style reporting rather than robust debate, still the best way of fleshing out points of view.

So if the bank bosses are smart, Mr Bailey’s bark should encourage them to give up their addiction to surreptitious, late-night calls to the Chancellor. Instead, they should try the daylight and be heard. For example, if the banks do believe the amount of capital they are being required to raise is too penal – and stops them from new lending to the real economy – then they should be saying so openly.

They could do worse than look at the airline industry to see how coming out helps in the long-term. It’s not so long ago that Virgin and BA nearly destroyed themselves with such cloak-and-dagger antics. These days, Virgin’s Sir Richard Branson, BA’s Willie Walsh and Ryanair’s Michael O’Leary who slug out their differences in the public arena. Now that’s direct democracy for you, even better than our representative style.

By hiding away behind their advisors and the British Banking Association, the banks are making themselves look weak and pathetic by not daring to speak out.

With any luck, Mr Bailey and Sir Mervyn have called their bluff by going public with their comments. If the banks don’t stop their back-street practices, we can only hope that Mr Bailey’s bite will prove to be as sharp as his bark.

Was it Monks who shamed the Church of England into action?

What a pleasure to see the Church of England backing a new bid for the 315 branches being sold by the Royal Bank of Scotland.

It’s new ground for the Church Commissioners and I’m told they have been looking to play a more direct role with their investments after being stung into action by Bob Monks, the US shareholder activist, who criticised them in an interview with me last year.

Apparently, they were upset that Mr Monks said he wished shareholders like the Church of England would be more engaged in companies they invested in. “These institutions are societal leaders and they should be leading the debate,” he said.

Bravo to Mr Monks, himself the son of a preacher.

Who says speaking your mind doesn’t pay?