Sunday 22 April 2018

Ministers blasted Honohan on the phone at key moment in ECB deal

Central Bank governor Patrick Honohan
Central Bank governor Patrick Honohan

Central Bank governor Patrick Honohan was severely rebuked by senior government ministers by phone for failing to seal the promissory note deal in Frankfurt last Wednesday night.

Several senior government sources close to the deal have said that Taoiseach Enda Kenny, Finance Minister Michael Noonan, Tanaiste Eamon Gilmore and Public Expenditure Minister Brendan Howlin were reportedly furious with Prof Honohan's failure to close the deal that night, as had been expected.

At the height of the drama, between 6pm and 9pm last Wednesday, the rebuke came once Prof Honohan informed the Economic Management Council members that the German Bundesbank Governor, Jens Weidmann, was demanding more time to consider the proposal at the ECB dinner that night.

Prof Honohan had been in constant contact with the Department of Finance throughout the early part of the evening and news of the delay was greeted with intense anger and frustration at the very top of the Government, sources said.

"There was certainly intense criticisms of the ECB over the delays, given a deal had been anticipated. But there was also some strong [criticism] of Honohan, for not seeing the deal over the line that night," one senior government source has said.

"Yes, we had already begun the liquidation so there was intense frustration at the ECB, and yes at Honohan as well, that the deal was not signed off on Wednesday night. It made things very tense," said another senior source.

News that the deal was not going to happen until at least the next day led one senior minister to say: "Well, that's what we get for sending an academic into the room and not a politician."

When approached last Friday night for his response to the reported intense criticism, Prof Honohan said he had "no comment".

Given Mr Weidmann's reported opposition to the deal, and ECB boss Mario Draghi's insistence that there must be unanimous approval by the council, the matter was adjourned until Thursday, when the council was to meet formally.

Despite the criticism of Prof Honohan on Wednesday night, all parties were unanimous in their praise of him for securing the unanimous agreement less than 24 hours later.

"The most important thing is that we got the deal on Thursday. We all would have liked it on Wednesday night. We all thought we would get it on Wednesday night. There was frustration but I don't think anyone now would have any complaints with Paddy Honohan," said another senior government source.

Irish Independent

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