“IF they wanted an economist, they should have picked Philip Lane,” a former Government adviser told me once.
Patrick Honohan was appointed governor of the Central Bank in 2009 at the height of the financial crisis, to drag the largely discredited institution back from the brink.
A Trinity College Dublin economist, his appointment by the late Brian Lenihan, along with
Matthew Elderfield as financial regulator, represented what we were told was a new no-nonsense broom of oversight and regulation.
But when my adviser source made his comment, it took me back.
“Honohan is better known to Lenihan and has been around longer, but Lane is the genuis in that economics department,” he said.
Lane’s pedigree as an academic is beyond reproach.
The posh-accented Dublin south-sider was professor of international macroeconomics and director of the Institute for International Integration Studies at Trinity, where he initially studied after Blackrock College.
At Trinity College, he was elected a scholar in economic and social studies. He then spread his wings and obtained a doctorate in economics at Harvard University in 1995. He later became assistant professor of economics and international affairs at Columbia University in New York.
Given his prowess and how well he is respected by his peers, there was considerable surprise when during the worst financial crisis in living memory, the best economic brain was not dragged into government to help steer the ship to calmer waters.
He was eventually linked with the chairpersonship of what was to be the Irish Fiscal Advisory Council but that never materialised, and NUIG’s John McHale got the nod instead.
But when Honohan announced his decision to retire in 2015, Lane was in prime position to contest the role.
At the same time, the name of Robert Watt, secretary general of the Department of Public Expenditure and Reform, was also strongly associated with the vacancy, and it is believed that it came down to the two of them.
Now, this is where it gets very interesting.
Watt is a former Labour Party activist and was appointed to his current post by now Labour leader Brendan Howlin when he was minister for Public Expenditure and Reform.
The night before the Cabinet was to approve the appointment, Watt was made believe the job was his, only to be blocked by then finance minister Michael Noonan, who said he was plumping for Lane instead.
Howlin and his Labour colleagues were furious, and Watt was denied.
Watt is a man who is not known for suffering fools, and many of his supporters in recent weeks have been querying if the current tracker scandal would still be going on, had he been appointed.
The failure of the Central Bank to bring the tracker mortgage issue to a conclusion before now, has been the subject of significant and constant criticism from within Government and from the Opposition in the past two weeks.
The sort of talk has echoes of the sort of criticism levelled at Honohan by Government during the liquidation process of Anglo Irish Bank in 2013.
On the night Michael Noonan liquidated the bank, Honohan, who was at an ECB meeting in Frankfurt, was hammered by Noonan and other senior Government figures for not getting the deal closed that night. “That’s what we get for having a fucking academic and not a politician in the room,” was what was said.
Despite the political criticisms, Lane’s supporters, including Finance Minister Paschal Donohoe, would say he too accepts this tracker scandal has taken too long to conclude.
But the banks have fought this tooth and nail at every step, his supporters will argue, and that enforcement in Ireland takes time.
Central to the criticism of Lane so far is the reliance on expressions of persuasion as opposed to sanction.
People would argue that his bank has known about this since 2010; has been examining this since 2015; and while a small number of fines have been issued, the banking industry remains largely unscathed, despite its scumbag behaviour.
Into this mix has come speculation that Lane could be in line for a top job on the six-
person Executive Board of the European Central Bank (ECB), which Ireland has never held.
All members are appointed by the European Council, acting by a qualified majority. But to date, the spoils of these prestige posts have been largely shared out between the Germans and French, and Lane’s chances will be determined primarily by who succeeds Mario Draghi as ECB president.
But Lane is very much on the radar of ECB-watchers and is regarded as an economic heavyweight across Europe.
It has been made known that there has been a concerted diplomatic effort by the Irish Government to make sure Lane’s name remains in the mix come the shake-up in the new year.
While the Central Bank has tried to dismiss the fresh talk of a potential departure as nothing new, it is clear some in Government are this week using the potential departure of Lane as a means of defence over the tracker mortgage scandal.
The thinking is that what the Irish Central Bank needs now is a far more political animal in charge, as opposed to an academic.
But, Lane despite having been monstered at the Oireachtas Finance Committee two weeks ago, does still retain a considerable amount of confidence from within Government.
Their primary desire to canvass on his behalf in Europe is a testament to their belief that he would excel on the international stage and is worthy of their support.
But the big test for Lane will come in December and in March on the tracker issue. If there is any further dragging of heels by the banks, then he must exercise the full range of the powers at his disposal — and demand more from Donohoe if necessary.
Nothing less will be acceptable from a public which is weary of rhetoric and sceptical that any real action will be taken.
Justice must be done and must be seen to be done, and we sadly have seen far too little of it being done.
Were Lane to go in the new year, it would begin a whole new round of speculation as to who would succeed him.
Interestingly enough, Watt’s term as secretary general at the Department of Public Expenditure and Reform is up next March and with that department looking like it will be subsumed again into the Department of Finance, could he land the gig at the second time of
He is young enough, still in his 40s, highly ambitious, and has a very good working relationship with Donohoe, who is his line minister.
His time may be about to come.