Profile: Howard Davies: City Enforcer? It's a Fair Cop the Head of the Financial Services Authority Is a Witty, Worldly Puritan. but He's Ready to Get Tough on Offenders. Peter Koenig Reports
Koenig, Peter, The Independent (London, England)
WHEN tomorrow at a conference in London's Docklands, Howard Davies officially launches the Financial Services Authority (FSA) - the City's new super-regulator - you can bet that whoever introduces him will make a joke about his hopeless support for Manchester City.
Davies, 46, grew up in Manchester. As a grammar school boy destined for Oxford and a glittering career, he became fanatically faithful to his home city's second football club - the only loser he has ever backed.
His support for City is now as much a part of his public persona as his reputation for having a big brain and versatile mandarin career - he has been personal assistant to the ambassador to France when in his twenties at the Foreign Office, adviser to Nigel Lawson while at the Treasury, head of the CBI and deputy governor of the Bank of England. To get under the skin of the man, however - to understand what sort of job he is likely to do now that, as the City's top cop, he has his year- old organisation up and running - you have to hear his response to the stories others tell about him. "Everyone knows I support Man City," he says. "But the fact is I support two teams. My family has a place near Banbury. At weekends my sons and I go to watch the local side, the Banbury Puritans - Banbury was a Puritan stronghold. My wife calls me a puritan, and I must say, I find it satisfying to shout: 'Go-o-o, you Puritans!'" Swindlers, cheats, fraudsters and other City miscreants, watch out. Davies is that most dangerous of all puritans, the witty, worldly kind. He's unshocked by BCCI, Lloyds, Barlow Clowes, Barings and pension mis-selling, but determined that the rash of scandals overrunning the fag-end of the Thatcher era won't happen on his watch. Davies's witty puritanism makes it easy for him to understand, and even take a certain pleasure in, the fact that the Robert Maxwell scandal bears an uncanny resemblance to the great financial scandal of the Victorian era. On 17 February 1856 the body of John Sadleir, MP for Carlow, Junior Lord of the Treasury, Chairman of the Royal Swedish Railway Company, and model for Mr Merdle in Dickens's Little Dorrit, was found on Hampstead Heath. The man had done away with himself in circumstances as murky as those surrounding Maxwell's demise after leaving the deck of The Lady Ghislaine off the Canaries. And, just as the full extent of Maxwell's defalcations emerged only after his death, so did Sadleir's: the rogue had sold pounds 150,000 of false shares in Royal Swedish. Davies's urbane puritanism dovetails nicely with the heavier, Scottish puritanism of Chancellor Gordon Brown. Both men believe that if the country is to stop mouthing phrases about smoothing out the boom-bust cycle and do something about it, a prolonged period of undeviating financial probity is imperative. Both believe that a component of this probity must be a new start on City regulation. The legacy Davies has been landed with is less than sterling. For the duration of empire the City was led by gents whose word, as the cliche goes, was as good as a bond - except in instances like the Sadleir affair. From the 1960s to the mid-1980s, as empire faded, the City changed from imperial financial capital into the capital of the emergent global financial system. The tax evasion money on which the eurobond market was built may have come from Belgian dentists, but the dollars used by those dentists were put on deposit in London banks by American transnational companies seeking to minimise their own taxes. And those dollars were tapped in offshore bond deals by fledgling eurobond houses like Siegmund Warburg's anti-establishment creation. Then when Margaret Thatcher assigned Cecil Parkinson to modernise the City - to keep it competitive as a financial centre with Wall Street and Tokyo, as well as Zurich and the Cayman Islands - an alphabet soup of self-regulatory organisations was created: the SIB, Imro, the PIA, the SFA. …