Tuesday, June 25, 2024

195 Brian Lenihan
Minister for Finance - Ireland

Irish Finance Minister battling the effects of one of the most severe national banking failures

A lawyer, educated at Oxford and Trinity College Dublin, where he lectured in law, Brian Lenihan has been responsible for managing the Republic of Ireland's economic and banking crisis, considered one of the most severe in the world following the collapse of Lehmans.

Within two weeks of the collapse of Lehmans, Lenihan introduced a blanket guarantee of deposits and liabilities in the major Irish banks, equivalent to assets of over €400 billion, more than twice the size of the Republic's GDP at the time, a vivid illustration of the meaning of 'systemic risk' in the world's banking system.

Since then he has battled on two fronts - a) to re-capitalise the banking system through the creation of a 'bad bank', called NAMA, and injections of state equity that has seen one smaller bank nationalised, and equity stakes taken in the major two Irish banks, and b) to reduce a Budget deficit, running at over 14 p.c. of GDP in 2010 to manageable levels. Lenihan also, in his 2010 Budget introduced a series of reforms designed to strengthen the attractions of Dublin's International Financial Services Centre, where the 25,000 employment levels have largely held stable through the credit crisis, presenting a dramatically striking contrast between the experiences of the Republic of Ireland's domestic and international financial services sectors. He also reiterated his Government's committment to maintainng Ireland's 12.5% corporation tax rate, in the face of renewed suggestions in the European Parliament that corporation tax should be harmonised in the EU.

Despite the Republic's historically low debt/GDP ratio, the size of the deficit, higher even than Greece in the eurozone, has led to credit rating downgrades for Ireland. This is despite strong action, led by Lenihan, to drag his Fianna Fail-Green Party Government away from its attachment to high pork barrel expenditures, and a oversized public sector, bloated on the fat of the 'Celtic Tiger' years.

Lenihan has gained widespread respect for his management of the Irish crisis, even from the fiscally hawkish Opposition Fine Gael spokesman on finance, Michael Noonan. Diagnosed with cancer late in 2009, Lenihan opted to maintain his hectic work schedule, greatly adding to his personal popularity, if not that of his party, Fianna Fail, which languishes in a historic third place in the opinion polls, not a good omen for its re-election, with a general election due by 2012.