Meet Mark Carney: the Canadian flown in to save the UK economy

 
Julian Harris
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IN APPOINTING Mark Carney the new governor of the Bank of England, the government has found an ex-Goldman Sachs director comfortable with garnering the views of the City – yet unafraid of standing his ground at times of conflict.

The Canadian famously clashed with JP Morgan chief Jamie Dimon after a fierce disagreement over the new Basel III regulations designed to safeguard the global financial sector.

At the heart of an evolving battle of macro-prudential regulation, following the most severe financial crisis in history, Carney is determined and speaks his mind.

“The reform agenda is being pursued with a legitimate effort to increase the resilience of the system in the most efficient way possible,” he told the Euromoney website last month.

“The interests of the private financial community should be absolutely aligned with those of the regulatory community to grow the real economy in a sustainable way. And the more enlightened members of the financial community have that perspective,” he said, in an apparent jibe at his nemeses.

His forthright approach earned him respect among global officials. “If Mark Carney had a run in with Jamie Dimon, then I have every sympathy for him,” former chancellor Alistair Darling told Channel 4 last night.

And the Bank of England’s Andrew Haldane has already clashed with his new boss. “I thought Haldane’s speech was uneven,” Carney said after the Bank’s executive director of financial stability questioned the complexity of Basel III. “Basel I was simple and it drove us off a cliff. Haldane’s conclusion is not supported by the proper understanding of the facts.”

The pair will need to patch up their differences if they are to work together on the Bank’s new regulatory responsibilities over the City. Carney’s term will be a shorter than expected five years, yet will cover a crucial period as the Bank radically extends its remit beyond monetary policy.

Born in Fort Smith, Canada, in 1965, Carney went on to study at Harvard and Oxford, meeting his British wife Diana Fox while taking his post-grad courses.

Both are economists, and have an environmentalist bent having worked on issues such as climate change.

CV | MARK CARNEY

Age: 47

Born: Fort Smith, Canada, 1965

Academia: Harvard (economics), Oxford (D.Phil at Nuffield College)

Career: 13 years at Goldman Sachs, senior associate deputy minister of finance (in Canada), and governor of the Bank of Canada.

Chairs the Financial Stability Board and is on the board of the Bank of International Settlements

Personal: Married to British wife Diana Fox, with four daughters.

Age: 47
Born: Fort Smith, Canada, 1965
Academia: Harvard (economics), Oxford (D.Phil at Nuffield College)
Career: 13 years at Goldman Sachs, senior associate deputy minister of finance (in Canada), and governor of the Bank of Canada.
Chairs the Financial Stability Board and is on the board of the Bank of International Settlements
Personal: Married to British wife Diana Fox, with four daughters.

CARNEY’S VIEWS

■ A critic of the US Volcker Rule on separating banking operations. “It is not truly accurate to say they [financial crisis events] prove that something systemic [was the cause],” he has said.

■ The cost of fresh regulations, such as requirements to build up capital buffers, is not culpable of hitting growth – so he argues. “In many cases, the problem is the absence of credit demand,” he said.

■ An advocate of flexible regulation with supervision rather than one-size-fits-all rules. “We are careful not to force absolute commonality in the financial system as this would reduce diversity in the market,” he said of new global moves.

The Bank of England’s huge new powers over UK finance

THE Bank of England under Mark Carney will be far more powerful than it ever has been under Sir Mervyn King. It is likely he will have to restructure his top team to cope with the job and take a role akin to that of a corporate chairman, with executives of each branch of the Bank below him.

Carney is expected to appoint two new deputy governors, in addition to the two currently employed. The governor will continue heading the central task of setting monetary policy – controlling interest rates and the printing presses in an effort to manage demand in the economy and so inflation.

The new powers being given to the Bank include control over financial policy.

Carney will chair the financial policy committee (FPC) which is charged with maintaining financial stability and stopping bubbles building. For example, it will be able to raise the level of capital banks hold against commercial property loans if it feels the market is overheating.

The Financial Services Authority is being broken up, with part of its powers going to the new Prudential Regulation Authority which will be run by the Bank. It is charged with promoting the safety and soundness of firms, including insurers and some investment firms.

Finally, a new chief operating officer is due to be appointed next year, and may become the fourth deputy director responsible for the day to day running of the Bank, including finance, IT and HR roles.

But the Bank’s power is not unlimited – the government still sets the inflation target and the instruments the Bank can use to try to achieve it, and alternative policies like Funding for Lending were driven forward by the Treasury and the chancellor.

OTHER GOLDMAN ALUMNI WHO’VE RISEN TO THE TOP

Mario Draghi
European Central Bank President
Former vice chairman and managing director of Goldman Sachs International


Mark Patterson
Chief of staff to the US Treasury
Was a Goldman vice president and managing director from 2004-2008.

Michael Cohrs
Member of the Financial Policy Committee
Worked for Goldman in New York and London in the 1980s.

Hank Paulson
Former US Treasury secretary
Three decades at Goldman, rising to chief executive.

Olusegun O Aganga
Nigerian minister for trade and investments
Worked in hedge fund consulting and European prime brokerage.

William C Dudley
President of New York Fed
Joined Goldman Sachs in 1986 where he was a managing director and the firm’s chief US economist.

Mario Monti
Italian prime minister
Was once employed as an was an international adviser to Goldman.

Gary Gensler
Chairman of the CFTC
Joined Goldman Sachs in 1988 and spent 18 years there, inculding time spent in Tokyo.

Robert Zoellick
Chief executive of the World Bank
Vice chairman, international at Goldman Sachs.