Thursday 29 September 2016

Ministers Howlin and Noonan in row over appointment of new Central Bank governor

Howlin told ministers he was concerned over Lane selection

Kevin Doyle and Philip Ryan

Published 21/10/2015 | 02:30

Public Expenditure Minister Brendan Howlin told yesterday’s Cabinet meeting that he questioned the selection made by his Fine Gael counterpart Michael Noonan
Public Expenditure Minister Brendan Howlin told yesterday’s Cabinet meeting that he questioned the selection made by his Fine Gael counterpart Michael Noonan

A Cabinet rift erupted between the two finance ministers over the appointment of Professor Philip Lane as the new Central Bank governor.

  • Go To

Public Expenditure Minister Brendan Howlin told yesterday's Cabinet meeting that he questioned the selection made by his Fine Gael counterpart Michael Noonan.

More than 100 applicants from Ireland and abroad applied for the role - but the final decision was a direct competition between Professor Lane and Robert Watt, who is currently the secretary general at Mr Howlin's Department of Public Expenditure and Reform.

The Irish Independent has learned that Mr Howlin addressed Cabinet colleagues yesterday "to put on the record" that he had concerns about the appointment of an academic.

It is understood that Mr Howlin said the Central Bank was now like a very large business. He argued that it needed someone with vast managerial experience, as well as the financial side of it.

However, Mr Howlin did not oppose the appointment of Prof Lane, which was later announced publicly by the Department of Finance.

Prof Lane (46) will take over from Patrick Honohan, who is set to retire next month.

He is hugely qualified in the field of economics as he holds a PhD from Harvard and has taught in Trinity since the late 1990s, when he arrived from Columbia University.

However, the Cabinet row over the prestigious appointment is likely to be picked up abroad, as the governor of the Irish Central Bank sits on the board of the European Central Bank (ECB) in Frankfurt.

Since the start of the financial crisis its every move has been closely monitored - not just here, where former ECB chief Jean-Claude Trichet's role in the 2010 bailout remains highly controversial, but also in Germany - where a number of legal challenges have been taken that question the scope of the bank's mandate and competence in relation to buying government bonds on the markets.

The Department of Finance said Prof Lane has been appointed, with immediate effect, to the Central Bank Commission to allow for his attendance at both meetings of the ECB and the Central Bank Commission.

Mr Noonan said he had an "outstanding economic, financial and policy-making record that ideally positions him to lead the Central Bank in the coming years".

And speaking publicly yesterday, Mr Howlin paid tribute to both candidates, saying: "I am obviously convinced that Prof Lane is eminently qualified and will make a very fine governor.

"I suppose, entirely selfishly, I have worked very closely with my own secretary general - who, it's no secret, was short-listed. I'm very happy that he is going to continue to work with me, to continue the path to recovery that we've worked on together for the past five years."

Sources said that the two ministers "will not fall out" over the appointment, but Mr Howlin wanted his views known.

In contrast, some other ministers were concerned that appointing Mr Watt would seem "too close to home".

Irish Independent

Read More

Promoted articles

Editors Choice

Also in Business