Mervyn King's New Job

Congrats on the new gig.

Photographer: Simon Dawson/Bloomberg

One of the most famous and incisive critics of the banking industry has now taken a job as an adviser to a bank. The outcry that has followed is not only unjustified but also bewildering.

Mervyn King, former governor of the Bank of England, has stirred controversy with his new job at Citigroup. Critics say such moves create a conflict of interest, and that, as the Financial Times put it, “public disquiet ... is justified.” But any suggestion that King is being rewarded for his complaisance while running the Bank of England is absurd. If anything, it’s encouraging that there’s a bank sufficiently open-minded to seek the counsel of an adviser who might tell it uncomfortable things.

The revolving door between the public and private sectors certainly needs to be monitored. Rules that insist on a delay between leaving one and joining the other make sense, especially when regulation is involved. (The Bank of England has such rules, and King complied with them.) More important, the actions of any regulator should always be examined skeptically, bearing in mind the possibility that the regulator is paying insufficient attention to the public interest or excessive deference to private concerns.

Nonetheless it's a good thing, not bad, that banks and businesses hire people who've worked in government, and vice versa. This is especially true of regulators: Policy makers need industry expertise to effectively design and enforce the rules, and financial firms need to understand the regulatory system in order to comply with it and take part in informed discussion about it.

There are risks, of course. Bad faith and evasion of the rules are always possible, and to some degree inevitable -- with or without revolving doors. The best guard against those risks is transparency in decision-making and proper accountability of managers and officials in their current roles, whatever they may be. Reflexively frowning on moves between banking and government does not advance the cause of either better policy or better conduct.

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