Robin McConnachie (Former Senior Adviser, Bank of England)
Members of the PEFM Group ended the term at St Antony's in fine style with a presentation and roundtable discussion led by Kevin Cardiff, a senior official in the Irish Finance Ministry at the time of the 2008/9 financial crisis. Currently member of the European Court of Auditors for Ireland he led the response to the crisis from 2010 to 2012 as Secretary General of the Irish MOF; and impressed all present with the perceptive frankness of his post crisis reflections. Kevin emphasised that he was talking about personal behaviour in a time of crisis, not giving a retrospective assessment of the economic and financial rights and wrongs of the eventual resolution.
Kevin's analogy was with the wartime situation. There were heroes and villains in both public and private sectors but fortunately more of the former, many of whom shouldered their added responsibilities at considerable personal cost. One abiding difficulty was of the uninvited third party – perhaps a big hedge fund – who periodically attempted to insert themselves into the crisis in order to make money. There were two business models here – one manipulative, the other more transparent – and much time was wasted in seeing them off; as officials handling the crisis were public servants they had to behave with visible equity. Obviously what is needed for the future are better detection and regulatory systems for earlier anticipation of future financial crises but so too are more robust processes for selecting and training those with public and private responsibility for the big financial decisions. Of course well intentioned people may make the wrong decision and the less principled may happen upon the right one. But Plato's essential question remains: what is it in a person's character and training that will influence him or her to take the best decision in a time of crisis? And can you ever guarantee that this will be the morally correct choice, either short term or longer term?
Points raised in the lively discussion that ensued were concentrated in two areas: first, what policy measures could you put in place so as to best ensure that this sort of crisis would not happen again, and secondly what if anything can be done to improve the collective ethics of countries and international bodies which may well differ from those of individual actors? The consensus view appeared to be that War Books were a good idea (even though the next war would be different), that it would therefore be useful to involve regulators in education and training (as in medical education and the nuclear industry), and that—up to a point—good behaviour can be learned e.g., through Codes of Conduct. But conventional remedies can only go so far (e.g., firing the Chief Executive of an insolvent or dishonest bank could not guarantee improvement) and—above all—society needs to address philosophical questions about the tension between personal and collective morality sooner than later.
Kevin's seminar was an uplifting follow up to the discussion the previous evening led by a senior UK banker about the difficulties of carrying through a top to bottom change in the culture of an organisation and the lively interest it provoked augurs well for next term's PEFM programme which will continue this theme.