Carney strikes a populist tone

Although his aspirations may be hidden from view, I have my eye on a future political candidate (see prior post “Governor Carney’s future political career looking good” Sept 10-10). He probably doesn’t even know that he’ll be running for office at some point down the road, at least not consciously.

But subconsciously, I think he’s allowing himself to morph into a very talented pol-in-waiting. Bank of Canada Governor Mark Carney’s speech earlier this week sounds like a starter’s gun to me (hat tip Barrie McKenna at the Globe). The topic was the new bank capital requirements, and Governor Carney — in not so many words — practically set fire to the desks of senior Bay Street bank execs (excerpt of Globe piece):

Bank of Canada Governor Mark Carney says commercial banks should explore ways to shield borrowers from bearing the full brunt of new higher capital standards – among them, by cutting their own personnel expenses.

In a speech at the German central bank Tuesday, Mr. Carney pointed out that avoiding the massive costs of another crisis far outweighs any short-term pain felt by banks and their customers.

Mr. Carney said banks have many ways to reach that mark. They can raise capital in financial markets, hang on to more of their profits or jack up fees and interest rate spreads.

But he suggested that if banks slashed compensation by 10 per cent, they could fully offset the cost of the new capital standards. And that would lessen the impact on the economy, by keeping borrowing costs lower.

There’s not a populist politician in Canada who could have said it any better. Had it been uttered by NDP Leader Jack Layton, you wouldn’t have been surprised. But for Canada’s Central banker to suggest that he’d prefer that bankers take a 10% pay cut rather than pass on notional increased capital costs to their clients, that’s simply eye-popping!

For all of his talents as a manager of interest rates, Governor Carney is reputed to truly love policy. Which is hard for him to draft and implement when his former colleagues at the Department of Finance maintain the position that the role of policy formation appropriately belongs to them and the folks in the Privy Council Office; oh, and the elected officials. Which must be frustrating to someone with far more ideas than his mandate allows him to tackle.

If Dalton were alive today, I could call him down there at his Northwood, Queen’s County hideaway and get him on the case. I think he’d love the idea, and my future candidate’s backstory: Yellowknife upbringing, Harvard education, Wall Street training, public service calling, populist anti-suspender ideology.

In case no one is helping you with this Govenor, here’s your path to even higher office:

– ensure you’re doing at least two stakeholder meetings a day with groups like the CFIB, Chamber of Commerce of Kitchener / Waterloo, Winnipeg Rotary Club, CVCA, Greenpeace, etc. — that’s 500 touches a year, and it’s all part of your job anyway
– perfect your French
– do the editorial boards regularly, and across the land; they need to get to know you better, they’re important sounding boards and should be treated as such
– never engage in a discussion about your future after the Bank, which includes never denying that you have an interest in Parliament Hill — just don’t engage (no one likes the “never say never” line)
– always return the calls of the PM, the Minister of Finance, and Liberal Leader Michael Ignatieff immediately, even before the background chats with the Ottawa Press Gallery (which if you’re not doing, you should be); they do control the path and prospects of their eventual successors, to a certain extent
– attend the Black & White Ball and the NAC Fundraisers in Ottawa, of course, but don’t avoid similar events in places like Calgary, Vancouver and Montreal when the opportunities arise (getting out into the community is part of your role, and no one will suspect a thing)
– keep smiling: it helps the consumer feel better about the economy, and makes for a great TV shot to boot

MRM