Friday 13 February 2009

Lenihan: Doing OK?

So how is Lenihan doing? I was amused by the phrase that went round when Lenihan was first appointed to Finance by Cowen : "we is very intelligent". It made me laugh. Was he really? How do we know? And doesn't it saw something about the caliber of our senior public representatives that having a brain would make one of them stand out. Anyway, there is no way of measuring intelligence that would adequately capture the skills necessary for being a good minister - smart yes, but also courageous and possessing sound judgement and an ability to lead and, nowadays, communicate.
Here now in the middle of the storm, everyone is shouting about Lenihan's shortcomings. He didn't capitalise first off; he didn't wind up Anglo; he didn't fold the two big banks into one good big bank and dump the bad loans in a financial landfill. But actually, must of the commentary is just people letting off steam (the remainder is mainly just political game playing). People are frustrated because they still expect some kind of quick fix or rapid conclusion. The nation hasn't settled into the reality yet that the Irish economy is small raft which has just entered a long canyon with a series of rapids along its length. We don't know how long the canyon is, nor how many rapids there are, and we have no idea whether a little raft like ours can make it to the end without overturning.
In general there has been little effort to understand the situation in which Lenihan finds himself. He is not a financial expert and even if he were, it wouldn't guarantee success for we have entered completely unknown territory. Lenihan is faced with a set of circumstances which are rapidly changing and for which there is no agreed or known formula for making things better. Even the most powerful nations have been badly shaken by the global crisis and are to a large degree are making it up as we go along. How could any Irish minister expect to be any different?
True, we can disagree about specific measures : the distribution of taxes or the percentage of board members which should be replaced, but in general there is no over arching template which will lead us to safety.
We do need an opposition now - for all measures taken now need careful scrutiny. But the general public should also scrutinise the scrutiny. It is very easy for Richard Bruton for example to list off what the minister is doing wrong. "it's very simple" said Bruton "we need to set up a new bank with a clean balance sheet". But no actually it's not that simple. This route has not yet been chosen by any other country. It is by no means tried and tested. It may carry considerable risk. For example, much of the present banks function perfectly well - they have systemic knowledge of the Irish economy, they know Irish customers, they use methods which have been honed for years, they have division which functions well. It seems reasonable to me to try to resuscitate them. Yes, we need immediate changes of personnel, and medium term we need to build a brand new regulatory framework and to try to create a new banking culture. But much of this will take time and considerable thought, debate and agreement in order to make it work.
Overall, I think Lenihan has tried pretty hard and as proved agile and courageous when necessary. He also comes across as quite commanding and determined. And I would be tempted to give him the benefit of the doubt. That is to say, I would see no prospect of better performance by any of his potential replacements, from within FF or without. ( By the way, this is not the same as saying I would be opposed to a change of government. I think that while Lenihan deserves a certain understanding, FF senior ranks and its power fattened, arrogant culture, is way out of touch and there needs to be a far broader rebalancing in society between the very wealthy, the merely well off, and the ordinary working people).
True, Lenihan should have read the entirety of the report that mentioned the IL&P loans. It was a mistake not to have done so. But I'm not convinced it meant that he wasn't taking the whole Anglo thing seriously nor that he wasn't dedicated to getting past that particular hurdle. But everyone makes a mistake and that one wasn't catastrophic. With our without that revelation Anglo was a basket case. But of course Lenihan cannot get away with many similar errors. He will have to be hyper diligent now.
Nevertheless, I think it is far too easy to say what Lenihan should do and what he shouldn't. For every second day he has to take (and has taken) enormous decisions which will affect this country for a long time. And there is no easy way. As economist Dan O'Brien said the other night "this is a process". And it is unprecedented and so it is like fire fighting. It's about keeping going and there are no easy answers.

1 comment:

Anonymous said...

One of the things I just do not get, is why have we not a Minister in place for this emergency. I grant you that Lenihan is doing his best, but as min' of Finance he has other fish to fry as well. I do not hold with the barbed comment on other sites that everything they are doing is wrong for I cannot see that any of the others would do much better. Who in the entire Dail has ever had much more than buying the Mortgage, with the exception of Quinn and Ross. Both of whom has at least the concept-if not the direct- of banking. They need someone at the table who can read all this stuff. And there is a mechanism to bring people in from outside. That's the why of the Premiers appointments to the Senate.