Monday 25 September 2017

Star Elderfield exposes our lack of financial expertise

IN truth, we are once again falling into the trap of expecting too much from one man or one institution; a particularly Irish disease.

We see this in the courts where judges are forced to invent laws because the Dail has been too busy fixing potholes to pass the appropriate legislation.

And we are now seeing it in the financial world where the Financial Regulator, Matthew Elderfield, must invent policy on the hoof about almost every aspect of our finances below the macro economic level, because our elected representatives can't get their heads around the issues or are just too scared to rock the boat.

Therefore, when the nation's top financial watchdog calls for an urgent review of Ireland's bankruptcy laws to allow borrowers embark on a fresh start by paying back their loans over a reasonable period of time, it is worth paying attention.

The (former) Financial Regulator might have been asleep at the wheel before the economic crash, but Mr Elderfield has been uncanny in spotting potential landmines ever since he arrived earlier this year.

Mr Elderfield is currently in a position of enormous strength and is one of the few public servants delivering hard-hitting, concrete results in his job. The Government, meanwhile, is wedded to an unfolding political drama and unparalleled economic austerity, wanting to cut the budget deficit as brutally and quickly as it can. It has little interest in dealing with anything else and is happy to leave Mr Elderfield pick up the slack.

However, policy abhors a vacuum and if the Dail fails to enact legislation to deal with problems such as mortgage defaults, the regulator must step in.

But why should this be left to one unelected man who has only lived here for little more than a year? Are subjects such as mortgage defaults not a little too important to leave to unelected public servants?

Has Mr Elderfield not got enough on his plate?

This mission creep within the already overstretched Financial Regulator's office would not be too serious were it not being replicated in other state organisations.

The National Treasury Management Agency has done an excellent job managing the country's debt, but with every passing year it gains new responsibilities so that one is left wondering what exactly they are doing down in Merrion Street.

The National Pension Reserve Fund, NAMA -- the world's biggest property company -- everything, it seems, can be managed from the treasury agency's tiny offices while it battles on with the bond markets and tries to keep the country afloat.

Ireland is like a soccer team with two or three star players (mostly bought on the transfer market) and little or no home- grown talent.

This doesn't work particularly well on the soccer field, nor does it work in the real world. Over-utilising the star player simply highlights the fact that there is no real depth in the team.

We need depth, right now. We should resist mission creep and make our regulators focus on what they understand and what they know best.

Irish Independent

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