Bean steps up at Bank after shock Gieve exit

It came as the Chancellor handed new powers to Threadneedle Street to make it legally accountable for financial stability. This is in addition to its role to set interest rates to control inflation.

Gieve quit last night as Deputy Governor as Alistair Darling outlined plans to reform how the Bank deals with financial stability - the area for which Gieve was responsible.

Bean replaces a second departing Deputy, Rachel Lomax, who leaves on 1 July, and the hunt is now on for a successor to Gieve. Paul Tucker, executive director for markets, is favourite to replace him although critics are holding out for someone with more clout from the City. The shake-up came as the Chancellor drew up plans for a Financial Stability Committee at the Bank. It follows the collapse of Northern Rock and was seen as an admission that the Tripartite Authority - the Treasury, the Bank and the Financial Services Authority - had failed to deal with the credit crunch and its fallout.

The new rules give the Bank the power to step in to save a failing bank, demand information about firms' finances, and inject emergency funding in secret. The Treasury admitted financial stability was hard to "define and measure" but promised more detail in the Banking Reform Bill to be introduced this year.

Jonathan Loynes of Capital Economics said: "The changes would appear to strengthen the position of both the Bank itself and in particular Mervyn King. Not only has the Bank taken on more responsibility for banking supervision, but confirmation of Charlie Bean's appointment will be seen as a victory for King."

The Treasury had been backing Tucker to replace Lomax while King was trumpeting Bean. A second vacancy could be filled by Tucker meaning both Whitehall and Threadneedle Street are satisfied.

The shock departure of Gieve was welcomed in the City today, with sources saying he was not up to the job and was exposed by the collapse of Northern Rock. They said his mauling at the hands of MPs after the run on the Newcastle mortgage lender meant his days were numbered.

Peter Hahn, fellow of the Cass Business School, said: "Gieve was the wrong man, with the wrong credentials in the wrong place at the wrong time."

Spencer Dale, a Bank lifer, was today made chief economist and joins the monetary policy committee.

DALE THE 'LIFER'

Spencer Dale, 41, the new chief economist at the Bank of England and youngest member of the monetary policy committee, is a Bank lifer. He joined its economic department straight from university with a BSc from the University of Wales and MSc from Warwick.
His fast-track through the corridors of Threadneedle Street saw him as Mervyn King's Private Secretary in the late 1990s when he was an architect of the newly formed MPC.
He is currently finishing a two-year secondment to the US Federal Reserve where he has worked with the interest rate setting FOMC.
Dale is married with two children.

THE POINTY-HEAD

Charlie Bean, 54, is the Bank of England's chief economist and an executive director. Seen as neither hawk nor dove, he is a serious pointyhead with a string of academic qualifications, and was Governor Mervyn King's first choice for Deputy.
Educated privately at Brentwood School, Bean graduated from Emmanuel College, Cambridge, and did a PhD at Massachusetts Institute of Technology. Two spells in the Treasury saw him move to the London School of Economics, where he became head of the economics department. He joined the Bank in 2000.
He lives in Chiswick and enjoys cricket and opera.