How much power for Bank of England?
Here's a funny thing.
Following my note of yesterday on Tory plans to give the Bank of England much greater authority over banks and insurers, I've been deluged with messages from bankers and regulators saying they fear that George Osborne would be giving the Bank too little power, rather than too much (and no, these missives haven't all been signed "Mervyn").
Here are their fears.
If the Tories were to give the Bank of England regulatory and supervisory responsibility for only the biggest banks and insurers - what are known as high-impact firms, those whose failure would have the biggest impact on the economy - the rump of the FSA left behind would become the lamest of lame ducks.
The Bank of England would be seen as the seat of real power in the regulatory game. It would be the glamour employer, if regulation and supervision can ever be glamorous. So the more able regulators and supervisors - the Ronaldos of risk assessment, the Kakas of capital adequacy - would want to work there, not at the FSA.
And the negative impact on the FSA would be immediate: such is the power of the Tories' substantial opinion-poll lead when an election looms, the FSA's current ambitious programme to recruit loads of better staff would grind to a halt.
But curiously those anxious bankers and regulators are not using their fears that the FSA would become the equivalent of a non-league side as a reason to promote the status quo (although there are some who think that the so-called Tripartite system can be improved with a bit of tweaking).
They say that if the Bank of England is to regain a role in supervision and regulation, there are two superior options.
One would be a full-scale merger of almost the entire FSA with the Bank of England.
The FSA's market regulation and financial capability bits might be left out of this merger. But everything else - some 2000 staff monitoring the health and business conduct of all financial institutions - would become part of the Bank of England.
This would present a management challenge. And the Bank would become a remarkably powerful institution - probably more powerful than the Treasury.
But the new institution would be seen as coherent. And with the right decentralised structure, it could well be effective.
The alternative is the so-called Twin Peaks model - which the chairman of the FSA, Adair Turner, hinted he rather liked in his evidence to the Treasury select committee on Tuesday.
This would see the Bank of England taking charge of prudential supervision and regulation of all financial firms, whether they were big or small. The Bank would determine whether each and every bank, securities firm and insurer had enough capital and liquidity and whether they were managing themselves in a sensible prudent manner.
The FSA would remain in existence as the assessor of the products sold by financial firms and also the evaluator of the selling methods of financial firms. It would determine, to simplify, whether you and I are being ripped off when we invest in an ISA, or buy insurance, or acquire a new credit card.
There is some logic to this split. It's the system that exists in Australia and the Netherlands, where it seems to have worked adequately.
But this division between prudential regulation and conduct-of-business rules is not completely clean.
Take for example the highly topical question of how much banks should lend in a mortgage as a percentage of the value of the relevant house, the so-called loan-to-value ratio.
This is relevant to prudential supervisors, in that it's an important factor in determining whether a bank is taking too much risk when lending. And it's also relevant to conduct-of-business regulators, who are concerned about whether customers are over-stretching themselves when borrowing.
In other words, there are benefits in combining within the one house both prudential and business-conduct regulation.
But I am absolutely clear that Osborne will split them. And no one tells me that would be a disaster, though some don't like the split.
The more pertinent question is whether Osborne would transfer to the Bank prudential responsibility for the biggest firms alone or whether he will give put the bank in charge of assessing financial risks being taken by every single financial institution.
Between now and the announcement of his decision, he'll be under intense lobbying pressure from the City to go for a fully fledged Twin Peaks system.
That said, whichever way Osborne jumps, the Bank of England will become much larger and more imposing. Within the context of the UK's mountain-range of economic and financial institutions, it would be moot whether the Treasury or the Bank of England would be Everest.