Tuesday, 14 March 2017

Charlotte Hogg Resigns from the Bank of England: The Importance of Perception

On the 7th March in Financial Regulation Matters, it was predicted that Charlotte Hogg would resign from her position as Deputy Governor of the Bank of England because she had failed to disclose the fact that her brother, Quinton Hogg, worked for Barclays in a division that was concerned with the actions of the Bank of England; today, Charlotte Hogg resigned from her post. This very short follow-up post looks at why this decision was not, in reality, in question; the reason was because of ‘perception’.

Rather than George Osborne’s rather unperceptive musing as to whether Hogg would have been pressured to resign in the same manner ‘if she had been an older man whose sister worked at a bank’, thus confirming his mandate to provide misdirection to the public in trying to turn this issue into a gender-based discussion, what lies at the core of this story is the need for the elite not to be proven to be operating against the public. Charlotte Hogg’s failure to declare has resulted in an abundance of news articles that focus upon her heritage, and this fact alone meant that Hogg could not continue; the news cycle focusing upon a conspiring elite is certainly not optimal for their position. However, the general capital of a regulator, in terms of its position within society, is arguably a reputational capital, and for that reason also, Hogg had to resign. Andrew Tyrie, the Chair of the Treasury Select Committee, noted as much when he stated that ‘Ms Hogg has acted in the best interest of the institution for which she has been working. This is welcome’. Hogg herself, in her resignation letter, stated that ‘We, as public servants, should not merely meet but exceed the standards we expect of others. Failure to do so risks undermining the public’s trust in us’, which highlights the understanding that preserving this reputational capital in the institutions which control society is of paramount importance, far more than preserving the reputation of a given individual. Financial regulators, as the face of that institutional power, must represent themselves consistently as a source of ‘moral authority and substantial [reputational] capital’ and this is the main reason for Hogg’s departure – it is important that we do not get dragged into the narrative that actors like Osborne wish us to focus upon.


Ultimately, it is extremely unlikely that Hogg would have conspired with her brother; it is simply far too risky for very little return. Schemes imagined by the elite, like the blatant scheme of defrauding society by way of funnelling them into pernicious systems of high finance, are often far more elaborate than having a financial regulator conspire with their sibling. However, any possibility of conspiracy, one which the public can easily see and understand, will be acted upon with great haste by the powerful, and this story represents that very understanding. If we look at a scheme that has been proven to be a conspiracy against the public, like giving mortgages to those who could never repay them and then selling that debt onto institutional investors who were deceived by government-supported financial practices, many of whom represented the public in terms of pension funds for example, then the complexity is promoted so that the public’s gaze are diverted – which is in stark contrast to the extremely easy to understand ‘connected person may be cheating’ narrative that has been seen for the past week. Charlotte Hogg will move into another area of finance, probably immediately, and may even return to the Bank of England at some point in the future; however, this story is a clear representation of the power of perception and how that power is understood by the people who have the most to lose by failing to consider it.

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