Bankers not entirely political pariahs
By Rob Cox
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
After the financial crisis, it became conventional wisdom that bankers would be unwelcome in the corridors of power. Never again would a Goldman Sachs chief like Hank Paulson get to determine the fate of global financial affairs, or so went the logic. Yet a series of top nominations worldwide show bankers aren’t as toxic as all that. As distasteful as that may be to some, it makes a degree of sense.
Italy is the latest major economy to again elevate bankers to key posts, starting with Prime Minister Mario Monti. The former European Commissioner has been an international adviser to Goldman for years. And in forming his new cabinet, Monti reached into Piazza Affari, Milan’s version of Wall Street, for talent. He named Corrado Passera – CEO of Italy’s largest bank Intesa Sanpaolo – as economic development minister.
The Italian duo will find it easy to talk to the former financiers running influential monetary bodies. Two weeks ago Mario Draghi took over as President of the European Central Bank. He, too, worked at Goldman. Filling Draghi’s position a few days later as chairman of the Financial Stability Board – which coordinates the G20’s financial activities – is another ex-Goldman banker, Canada’s Mark Carney.
It’s easy to see why the public might object to these revolving doors. Overleveraging, overreaching, overpaid bankers caused the downturn, right? Well, that may be partly true, but there’s a solid argument for converting these poachers to gamekeepers.
The world’s developed economies are struggling with a textbook financial crisis. Resolving this takes specific, real-world expertise. As Italy showed, familiarity – nay savvy – with the rapidly moving dynamics of capital markets is critical. Silvio Berlusconi might still be in office if he knew how to persuade investors to keep buying the country’s debentures.
It’s critical that these former bankers leave their conflicts at the door. Any suggestion that they would convert their public service to a lucrative return to finance would be poisonous. Thankfully, that seems far-fetched for the latest recent crop. They’ve already made enough money to sufficiently focus their energies on saving the world.