Ottawa has always been a “see-and-be-seen” kind of town, but the chances of running into a power broker are even higher in the runup to the holidays. As we wait, Mr. Carney runs into Marie-Josée Kravis, the former Conrad Black-era director at Hollinger International and wife of Henry Kravis, who as founder of U.S. private equity giant Kohlberg Kravis Roberts & Co., just happens to be one of the richest men on the planet.
The two exchange hellos, a reminder that, nowadays, everyone wants a piece of Mr. Carney, the first Canadian to hold a position with such global reach.
Already a relentless critic of the banking industry’s resistance to reforms and a valued adviser in European policy makers’ efforts to solve their region’s debt crisis, Mr. Carney was tapped in November by Stephen Harper, Barack Obama and the rest of the leaders from the world’s 20 most important economies to lead the FSB, putting him in charge of an ambitious drive to toughen the rules of global finance. As chairman, he must bring together officials from around the world to try to ensure the banking system never again sees a near-meltdown like the one triggered by the U.S. subprime-mortgage collapse. And after a trading scandal involving the wife of his No. 2 at the FSB – former Swiss central bank chief Philipp Hildebrand – recently ended his long-time pal’s career, he will be shouldering more of the FSB’s chock-full agenda for 2012, on top of keeping the Canadian economy onside.
The hope among many is that Mr. Carney’s intellect, charisma and persuasive powers will make it hard for nations’ banks to shirk their commitments. Central to this is a beefed-up campaign to monitor whether and how countries are implementing new rules, and to “name and shame” governments that aren’t doing their bit to rein in the riskiest behaviour.
One of the most high-profile measures the FSB is pushing would see 30 or more of the world’s biggest and most interconnected banks hold more capital in reserve, because the failure of any one of them could devastate the financial system and, as in 2008, the wider economy. Related is a drive to ensure that if reckless decision-making puts one of these behemoths at risk of collapse, taxpayers aren’t left holding the bag through massive government bailouts, as was the case in 2008 – that shareholders absorb the losses instead.
“We’ve made a lot of progress collectively, but ‘too-big-to-fail’ has not been ended,” he says, at the start of one of his most passionate answers in our hour-long lunch.
“I do not meet anybody in the general population who says we should keep too-big-to-fail. I do meet people, from time to time, who have vested interests, who argue effectively for keeping it, but they never would dare say [publicly]that they want to keep it, because everybody knows it doesn’t make sense, it’s wrong, it’s inconsistent with a market system, and it’s inconsistent with a sense of fairness. Trying to finish that and to advance that, that alone was reason to do this [job]”
Mr. Carney has always been good for a pithy quote. In his new role, though, anything he says can be fodder for headlines.
Earlier in his term at the Bank of Canada – a post that started in February, 2008 – he could still occasionally be seen enjoying a post-work pint with friends in downtown watering holes, even ones crawling with journalists. Now, he almost never sits down with a reporter unless his media assistant, Jeremy Harrison, is there. (Today is no exception; Mr. Harrison is taking notes and running a tape recorder right along with me.) Nonetheless, he has made a habit of voicing refreshingly honest, and clear, comments when you least expect.