Carney leaves with the crowd panting for more

There was a part of me that was going to just let it pass.

In the three weeks since Bank of Canada Governor Mark Carney’s exit was announced, much has been written and speculated. The why, how, what, when, instead of…. I’ve tried to read it all, and came to the conclusion that none of these folks really could be certain of what they were saying. Even when they had good reason to think they knew what they were talking about. The pinnacle of the media’s firestorm was the attempt at an in depth look at the “Recruit Carney for Liberal Leader” rumour by the Globe and Mail yesterday.

Before we get to that, I pulled out my first prose on the man following his appointment in 2007. At that point I’d never even been exposed to him other than on my 13″ office TV:

Although Mr. Carney was seen to be a “Finance” candidate in some quarters, his initial time at the Bank undercuts that label. The more suitable label can only be “change agent” in my mind. With barely four years on the ground in Ottawa, he certainly isn’t anyone’s inside candidate. The Board of the Bank seems to have had full rein in making their choice, without a hint of pressure or influence from the Finance Minister or the PMO. And with half of the Bank’s Board members being appointments of former Prime Minister Martin, and the other half getting the nod from Prime Minister Harper, it’s no small feat that they could agree on taking a bold step. That Mr. Carney is thought “to be a Grit” makes his appointment that much more pristine, given the minority government situation.

Given the summer we’ve had in the credit and financial markets, the timing couldn’t be better. With OFSI pointing fingers at DBRS, yet not taking responsibility for their own role in the asset backed commerical paper (“ABCP”) fiasco, it is the perfect time for a fresh look at how our regulatory system is structured. With a new Bank Governor, who is easily young enough to complete two 7 year terms, who better than Mark Carney to bring some sense to an antiquated system?

Over the past hundred years, our financial system has changed dramatically. Yet the oversight bodies are stuck inside their historic fences. What’s OFSI’s role with the proliferation of financial players, not all of whom are regulated at the national level? Is the Bank of Canada merely here to issue the currency and set the bank rate? In the absence of a national securities regulator, who has the role to head off things like the $45 billion ABCP disaster (see post “Where’s the Bank of Canada on Coventree stumble?“, August 14-07)? Currently, no one seemed to have been “point” on it.

And the consequences are entirely made-in-Canada.

That’s just one obvious example of the types of issues Mark Carney will undoubtedly be thinking about when he assumes the mantle in February. It’ll take some deft stick-handling to bring monumental changes to the way the Bank and OFSI function, but for a guy who made it from Fort Smith to Harvard to Goldman to the Bank of Canada’s top job in less than 20 years, it should be a snap.

We’re rooting for you.

Five years later, this star of international finance has been throw all number of career opportunities, with the Federal Liberals being the most blatant.

It wasn’t a novel concept, I’d say. I hate to brag, but I think I was the first to publicly suggest that the Governor pick up the political torch via our modest but loyal blog readership more than two years ago (see prior post “Governor Carney’s future political career looking good” Sept. 10-10 and “Carney strikes a populist tone” Sept. 16-10). I even came up with a path for the governing party to get him out of the Bank of Canada and into the legislative end of the Ottawa Establishment (see prior post “How about Carney as Minister of Economic Transformation?” Feb. 8-11).

It didn’t dawn on the National Post’s Terence Corcoran until May 2012.

I saw talent, first and foremost, and an interest in public policy. Two key requirements for success in the political game. I didn’t know whether or not Governor Carney was actually a Conservative, and the rumour of 2007 was to the contrary. In a way, that was a secondary consideration: get good people into public life; worry about their stripe later. He seemed to be responsible on the economic front, which is the foundation of any CPC candidate in this day and age. But now that I’ve read of his Father’s attempt to win political office as a Grit, perhaps the Governor harbours Liberal leanings. Life isn’t that simple you might say?

Consider this: Dalton Camp’s son became an advisor to Kim Campbell; Senator Norman Atkins’ eldest son ran for a P.C. nomination. Justin Trudeau didn’t fall anywhere but to the base of his tree. Jack Layton’s son was elected under the NDP banner. The Bushes are all Republicans, just as the Kennedy’s all seem to stand as Democrats; Democratic Governor Andrew Cuomo followed in the path of retired Democratic Governor Mario Cuomo. Progressive Conservative Leader Robert Stanfield’s former Press Secretary wound up working for Brian Mulroney and now writes this blog. Off the top of my head, only Ontario Health Minister Deb Matthews eventually set her own course in the wake of her Father’s Presidency of the Federal P.C. Party.

Does this reflect a chilling lack of independent thought by all of us, or just our lot in life?

The idea that Governor Carney, if he were ever to consider a political turn, would wear Red might be a fair bet if you believe in predictive political genes. Two years following my clarion call (see follow-up post “Governor Carney’s future political career looking good part 2” Sept. 26-10), it seems that some Liberals are so unsure of the own heir apparent that they had to steal the idea of a Tory and beg Governor Carney to think about breaking his code of office.

As the Governor himself said at a press conference when asked about running for the Liberal Leadership, “why not become a circus clown?” That putdown sounds like Pierre Trudeau in his prime, and it probably broke the heart of Carney for Liberal Leader proponent Scott Brison to hear him compare the Liberal Party to a circus.

The entire idea is ludicrous, of course.

You don’t wind up in the top job at the Bank of Canada without understanding the duty attached to the Governorship. It isn’t a place for retired politicians, nor is it a Launchpad to elected office. It is even more distinct than the legal separation of Church and State, despite the appearance of a coordinated working relationship with the government of the day.

The last time a federal politician tried to tell the Governor what to do (James Coyne), the fellow quit. Mark Carney understands that even the appearance of favouring one political party over another would destroy his credibility; credibility being all you have to get through the day in a G-7 central banking function. And do serious damage to the entire institution.

It may well be that the Liberals misunderstood Mr. Carney’s speech on the “Dutch Disease” or his appearance at the Canadian Auto Workers’ annual meeting. The Governor used his bully pulpit unlike any Governor in recent history, and the media ate it up. The fact that he neither looked nor sounded like James Crow was taken by senior Liberals to mean he might be Canada’s Dwight Eisenhower, fresh off the battlefield of the global financial crisis and ready to lead a grateful Nation.

But you have to ask yourself, was that really the Governor’s mission with all of those rubber chicken circuit speeches? To backdoor his way into politics? I find it hard to believe.

The tongues wag so much in Ottawa, with every motive being questioned, even if your heart is without sin. All of which must be clear to someone as intelligent as the Governor, not to mention his earlier training in the black arts of interpersonal relationships during his decade at Goldman Sachs.

There’s a saying “you get too much credit when things go well, and too much blame when they don’t.” Watching the press conference when the Governor announced his move to the BoE, the journalists asked questions that made it sound as though there wasn’t another person in the room other than Governor Carney as the Canadian government dealt with the 2008/09 financial crisis. This explains some of the Liberal hunger; they knew the Press Gallery loved the man.

Whether Governor Carney pushed the government to do things it wouldn’t otherwise have done to keep Canada from going into a deep recession is unknown. The multi-billion stimulus spending under Minister John Baird was essential. A co-ordination of Finance, PCO, OSFI and the Bank of Canada might have been required to push CMHC to come to the assistance of Canada’s banks when their liquidity dried up in 2008. If the credit for these two programs belongs to a single person or entity, we’ll have to wait to read about it all in one or more autobiographies down the road to find out for certain.

In the end, Canada’s banks accessed over $185 billion of U.S. and Canadian government capital to keep their lights on (see prior post “Canadian bank bailout total touches $186 billion” Dec. 2-10). Without that non-bailout, bailout capital, their shares would have been worthless soon after the Lehman bankruptcy. During the same period, two large British banks were nationalized, others became insolvent — all of which likely worked against the internal Bank of England candidates who might otherwise have been chosen to lead the Old Lady of Threadneedle Street.

None of this mattered to a well-meaning group of Liberals who didn’t think Justin Trudeau could knock off Prime Minister Stephen Harper. You can sympathize with the strategy. Attempt to neutralize the PM’s bonafides on the economic stewardship front, and then try to fight him on issues like the environment, health care, or immigration.

Governor Carney might well have been the answer to their prayers, but they missed a simple reality. It was never possible (see prior post “Enough of this Mark the Great Liberal Hope blather” Sept. 28-12).

Had the Governor taken the plunge, every one of his successors would have been suspect the moment he/she put any effort into public relations beyond the simple message of stable inflation and fiscal prudence.

PM Stephen Harper and Finance Minister Jim Flaherty had the self-confidence to recognize that a different voice and backdrop was helpful to their own economic messaging. BNN and CNBC are constantly broadcasting images of U.S. Fed Chairman Ben Bernanke appearing before Congress or speechifying at a Wyoming Think Tank. Encouraging Governor Carney to do what came naturally, “and go on the road”, speaks to the collective sense of purpose that has made Ottawa work well over the past four plus years. It’s not that the Ottawa Tories never read Machiavelli, it’s just that they never worried, for a moment, about Governor Carney’s career plans.

Sometimes a rose is a rose is a rose. Even when there’s a Trudeau in the offing.

Although The Globe and Mail referred to other political parties offering a place for Governor Carney in their tent(s) should the interest be there, it’s interesting that it is only spurned Liberals who are falling all over themselves to publicly embarrass their former quarry with stories of alleged get-to-know-you coffees, telephone calls and private vacations.

Carney is off to England next summer. What’s the point of reliving a summer romance that didn’t have a happy ending? I get why the Globe wanted to pursue the rumour; I just can’t fathom why people, including members of the Queen’s Privy Council, would talk about what “Timmy” was up to. On the record or otherwise. Whatever you did, or thought you were doing, failed; how does airing the alleged dirty laundry help the Liberal Party defeat the Prime Minister next time around?

It did serve a purpose, if only to confirm what was always clear to many of us. Having swept through our lives at an interesting time, Governor Carney leaves with the crowd panting for more.

MRM
(disclosure – this post, like all blogs, is an Opinion Piece. And, of course, reflects a personal view and is not meant to represent the views of the TPA, its Board/Staff or the federal government.)