Praise heaped on Financial Regulator after first 100 days

It's usually only national presidents like Obama or Sarkozy who are judged on their first 100 days in office, so if would-be-reformers get it wrong early on, there is usually little hope for the remainder of their time in office. Unusually, the same test is being applied to assess the early days of the new regime down on Dublin's Dame Street and the new brooms at the Central Bank and the Financial Regulator have so far passed the first tests with flying colours. Matthew Elderfield started work as the new Financial Regulator in early January. After three years doing a similar job out in sunny Bermuda, the 44-year-old took a pay cut to head up the regulatory office under a new Central Bank governor, Patrick Honohan. Both financial guardians have had praise heaped on their heads. Honohan, the Trinity College professor and former World Bank senior advisor, started well after taking the job last September. He spoke plainly with a touch of wry humour about the scale of the banking wreckage. Despite facing the reluctance of the governing Fianna Fail and Green coalition, he eventually persuaded Taoiseach Brian Cowen to set up a banking inquiry. He fell short, in my opinion, by allowing the inquiry, led by Klaus Regling and Max Watson, to hold its preliminary investigations in secret or, as the Government insists, in confidential sessions. But it was Elderfield who has attracted the glowing reviews from print journalists and raised admiring comments from the public. A texter to one of the big radio chat shows even suggested Elderfield would make a fine Taoiseach - high praise indeed for an Englishman. Elderfield has evidently made an impression, nonetheless. He set the pace at his first public appearance late last month. With Honohan by his side, Elderfield announced the new capital buffers for the banks. Some of the banking chief insiders who were directors during the bust and whom the Department of Finance allowed to continue to run the major banks wanted longer, maybe as long as to the back end of 2011, for them to raise the money to replenish their reserves. But Elderfield insisted he wanted the wrecked banks to draw a line under the crisis and told them to show him their plans to raise the cash by the end of this month. Some sort of banker versus regulator rumble had taken place, and for the first time ever in Dublin, the regulator had faced down the banking bosses. But he immediately faced a serious challenge. At the same press conference late last month, Elderfield went onto explain why he had applied to the High Court to appoint administrators to Quinn Insurance, the cash-generating part of Sean Quinn's highly indebted cement, hotels and international property conglomerate. It emerged the new regulator was exasperated with the broken promises and revised business plans Quinn Insurance had presented to his officers in recent months. Shifting the insurer out of the Quinn Group was not popular. Momentarily, it was the regulator who was under siege. In their hundreds, Quinn Group employees marched past the Dáil, worried about the future of the jobs in the interlinked insurance and group companies. Legislators and the rest of the country looked on to see who would blink and Elderfield did not lose his nerve. A compromise of sorts was reached as he re-examined the case for the insurer to restart selling some insurance lines in the North and into Britain. He kept up the pace, telling Michael Moynihan's admiring Oireachtas committee of legislators that the banks faced nothing less than "a fundamental overhaul". The lenders could expect an "assertive" regulator in their dealings with his office. To be fair, such was the wreckage caused by bank directors who still cling to their jobs running the taxpayer-supported banks, that any new financial regulator taking over from his failed predecessors on Dame Street could have been expected to say the same. But, for me, the scathing comments he directed at the Irish Stock Exchange have marked him out as a special regulator. The exchange, which is run and owned by its member stockbrokers in Dublin, had decided to take advantage of a regulatory loophole and not accept complaints against its member firms, including significant allegations of miss-selling complex investments to unsophisticated investors, if the complaints applied before 2007. Elderfield publicly rebuked the exchange and challenged its board to "step up to the plate". This week, Elderfield unveiled new corporate governance rules - the composition of banking boards - that will likely also influence the board of the stock exchange. A national newspaper wrote an interview headlined that the regulator faced an unenviable task of taming the banks. In truth, Elderfield may have one of the best jobs in financial regulation in Europe. He may have taken a pay cut but the €340,000 a year salary and €100,000 bonus he will receive after three years is hardly badly paid. It also gives him something of a moral advantage in his dealings with some banking bosses, whose pay was supposedly capped at €500,000, but who bizarrely still appear startled by the public and political rumpus when they accept so-called top-ups to their pensions. Commentators shouldn't get too carried away by a regulator who is doing the job he is paid to do. The new capital levels he has set for the banks may yet not be enough, but it's still been a good first 100 days for the new ringmaster.