Libor scandal: the Governor's reputation is on the line It is clear that there is a general level of otherworldliness that permeates the Bank. Someone else with a close understanding of how the Bank operates said that the internal atmosphere is stultifying, a dusty command and control culture that does not encourage the sharing of information. Among the pillars and echoing corridors of Threadneedle Street, people are expected to know their place in a rigid hierarchy. Challenge is not much tolerated. "The question is, is the Bank fit for purpose?" the person said. Everyone is understandably obsessed with changing the culture of banking after the Barclays Libor scandal. We need to be equally focused on changing the culture of the Bank of England itself. The issue is, of course, particularly live at the moment. This week Sir Mervyn will appear before the Treasury Select Committee as part of the normal calendar of meetings he has with his Parliamentary interlocutors. It is impossible to think he will not be asked about the Libor issue. On Friday, the New York Federal Reserve released a cache of emails that are most unhelpful for Sir Mervyn and the Bank's Deputy Governor, Paul Tucker (a man who would like to be the next Governor). Tim Geithner, now the US Treasury Secretary, and then head of the Fed, wrote to Sir Mervyn in June 2008 raising concerns about Libor. Mr Tucker was cc'd into the email. Sir Mervyn's response? To pass the issue on to the British Bankers' Association, the trade body run by and for banks which operated the clearly malfunctioning Libor system under only the lightest of supervisory regulation. "We will ask the BBA to include in their consultation document the ideas contained in your note," Sir Mervyn wrote back to Mr Geithner. There appears to have been very little urgency, either from the Bank or the Financial Services Authority. How different activity was on the other side of the Atlantic where Federal officials were busy using their contacts in banking to collect information. The joke about Sir Mervyn is that he could fit his close contacts in the banking industry on the back seat of a Mini. The issues of culture and speed of action go to the heart of who will be the next Governor when Sir Mervyn steps down next year. We are only two months away from the process to appoint being launched by the Treasury. The past few weeks have thrown a harsh light on some of the candidates. Mr Tucker's application has certainly been undermined by evidence that he received warnings about Libor but chose to interpret them as showing the fixing was malfunctioning rather than dishonest. Lord Adair Turner, the chairman of the FSA and another candidate, is also giving evidence to the Treasury Select Committee this week. He is indelibly linked with the failures of past regulation and although it is clear the FSA was at least warning more recently about the operating culture at Barclays, the authority did not appear to act on those warnings. The FSA agreed the appointment of Bob Diamond as chief executive, did not require him to stand down until ordered to by Sir Mervyn following Libor and also agreed the promotion of Jerry del Missier to chief operating officer a matter of days before the Libor scandal broke. The damage to the two front runners leaves the field more open for external candidates. Two already known to have expressed an interest are Lord Gus O'Donnell, the former Cabinet Secretary, and Jim O'Neill, the chairman of Goldman Sachs Asset Management. The question for Lord O'Donnell is whether he has enough in-depth experience of banking to really understand the shake-up in culture the Bank needs. The question for Mr O'Neill (and let us be in no doubt, he is a serious candidate) is whether or not his very particular open style will fit with the way the Bank operates. The passionate Manchester United supporter who speaks "human" exceedingly well would certainly be a breath of fresh air. Whether or not the Treasury wants such anti-bureaucractic refreshment is, as yet, difficult to fathom. There is another candidate. A candidate who brings in-depth knowledge of the banking industry and an owlish attention to detail necessary for such a job. He is also respected throughout the financial world, particularly in the vital emerging markets, for running a bank that survived the crisis and has increased revenues and profits quarter after quarter. Being a key advisor on the government's bail-out plan in 2008 doesn't harm his credentials either. George Osborne, the Chancellor, should dust off his telephone and ring Peter Sands, the chief executive of Standard Chartered. Yes, I know he has ruled himself out already when the bank said on rumours that rumbled around earlier this year: "Peter is happy at Standard Chartered and being part of a successful team." He may well be, but he should still be wooed to apply. There will be howls of protest, demands to know how you can put a banker in charge of financial services regulation. But, as is often the case, poachers make the best game keepers.