Jim Flaherty's legacy felt on the world stage, says Mark Carney
It is clear from the outpouring of tributes for Jim Flaherty that he left an indelible mark on federal and provincial politics, but he was also an influential player on the world stage says former Bank of Canada Governor Mark Carney.
In an interview airing Saturday on CBC Radio's The House, Carney who now lives and works in London as governor for the Bank of England, told host Evan Solomon that Flaherty's pragmatism was never more evident than when he sat at the table with other G7 and G20 leaders.
"In the wake of the collapse of Lehman and let's face it, the verge of the collapse of the global financial system, the pragmatic Jim Flaherty was fully in evidence."
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In early September of 2008, the U.S. government decided to bail out Fannie Mae and Freddie Mac, two big firms that had guaranteed thousands of sub-prime mortgages.
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Less than two weeks later, investment bank Lehman Brothers filed for bankruptcy, prompting worldwide financial panic. Then the U.S. Federal Reserve announced an $85 billion U.S. rescue package for AIG, the country's biggest insurance company, to save it from bankruptcy. The AIG bailout would grow to more than $185 billion U.S.
Back in Canada, Flaherty was in the middle of a federal election campaign with voters going to the polls on Oct. 14, 2008.
"The first thing that strikes me in reflecting back to 2008, is that it was in the middle of an election campaign for him and for the country."
"The sands were shifting as that campaign went on, the sands were shifting in the global economy quite dramatically. He was focused on the campaign as well as doing his job," Carney said.
The crisis was such that by October 2008, the situation demanded action, the governor recalled.
"He was very effective in his interventions in pushing the group, particularly the G7 but ultimately and very importantly the G20. Bringing the G20 in and pushing them to action," Carney said.
As the crisis continued into 2009, Flaherty was not afraid to go toe to toe with the best of them but it was his own principled approach that set him apart.
"'It's absolutely paramount to fix the banks,' as Jim Flaherty would say over and over in these meetings," Carney recalled.
"That's the lesson he took from Canada and the lesson we all took from what [former U.S. treasury secretary] Tim Geithner and the U.S. administration did in early 2009."
"He wasn't afraid. He was very direct and he was consistent particularly with respect to Europe," Carney recalled.
By 2011, Flaherty was heard telling Europeans time and time again that it was time for them to make the hard choices.
And when they didn't, the Canadian finance minister did not hesitate to let them know they had to take further action and follow through on commitments already made.
"He would give his assessment about how much progress the Europeans had made in fixing the banks, which was never enough in his view. He was right about that," Carney said.
"We're really just starting to get to the point where the Europeans are fulfilling what Jim Flaherty had been asking."
Flaherty was an "effective voice" in those meetings, Carney said.
"You get a lot of fancy words and highfalutin economic concepts but it's important for somebody to cut through to the bottom line and that's what he did."
'A last memory'
The two men spoke for the last time about three weeks ago after Flaherty resigned as finance minister.
"It struck me that he was very much looking forward to a new chapter in his life and more time with his family but also some new challenges in the private sector," Carney said.
"It just adds to the sadness."
Carney said it was with "shock and great sadness" that he learned on Thursday of Flaherty's sudden death.
The news came as Carney was in Washington, D.C., for a spring meeting of the G20 with Joe Hockey, the treasurer of Australia, who was chairing the meeting.
"He had just heard. It's never good to hear these things. It was good to hear it from someone who respected Jim Flaherty as much as I did," Carney said.
Hockey later issued a statement on behalf of the G20 finance ministers and central bank governors to mark the death of Canada's former finance minister.
"Jim was a man of strong principles and held firm to his core values."
"As finance minister through one of the most challenging periods in modern economic history, his hard work and leadership were instrumental in helping to shape the recovery and in charting Canada’s path back to surplus. At all times, Jim retained his refreshing honesty and good humour," the statement said.
"I very much enjoyed working with him and benefited from the depth of his expertise and wisdom, as did the G20 itself in the eight years he was part of the group," Hockey said.
Carney said one of the last times he saw Flaherty was in February at a pub in Sydney. The two men watched as the Canadian men's Olympic hockey team beat Sweden 3-0 in the gold medal game.
"If you're going to have a last memory, that's a pretty good one."
At the end of the day, Flaherty was a man who "enjoyed people, he enjoyed the opportunities that being finance minister afforded him and we had a lot of good times together, a lot of laughs. He earned that and very much more," Carney said.
Flaherty leaves behind his wife, Ontario MPP Christine Elliott, and their three triplet sons, John, Galen and Quinn.
A state funeral will be held for Flaherty next Wednesday in Toronto.