January 10th, 2012
08:24 AM GMT
London (CNN) – When I first heard that the wife of Philipp Hildebrand, then president of the Swiss National Bank had bought foreign exchange, weeks before the bank changed policy, giving her a thumping big profit, it seemed an open and shut case.
Of course he had to go.
Whatever the truth, there is the perception of something smelly and central bank presidents have to be whiter than white. Beyond reproach. Above suspicion. Initially he tried to brazen it out. Finally he admitted that “it’s not possible for me to deliver a definite proof that my wife requested the currency transaction without my knowledge," so he resigned.
I still think he had to go.
But the more I have thought about this the more I ask, "why?" Surely it can’t just be because his wife did something which he says he knew nothing about. We are long past the Biblical (or Victorian) times of a husband being liable for their wife's actions. And once you accept that, then all he has been guilty of is having a stupid wife. who should have known better. As far as I know, that isn't an offense.
I don't think for a moment he knew (otherwise he is criminal rather than joining his wife in stupidity) so there has to be more to justify his resignation. No. Philipp Hildebrand's offense was not reversing the transaction the moment he heard about it, the day after the dollars were bought, in mid-August. Instead those dollars weren't sold until October, making the Hildebrands a thumping profit. He wasn't just slow... he waited and made a profit.
So a picture has emerged of a central bank president who has previously traded currency when selling houses, held investments till profits were made, tried to brazen his way out of it and only when political support evaporated fell on his sword.
That is why he had to go.
It is a shame because, by all accounts, he was an excellent president of the SNB. Unfortunately in our world of heroes with clay feet and fallen superstars, they are in a league of their own.
Today's central bankers wield more power than most presidents and prime ministers. They are probably the only saviors of our economies for whom printing is the weapon of choice. They are the ones who have to dig us out of the mess. Bernanke, Trichet, Draghi, King – all on the front line in the battle for recovery and against inflation.
None of them has gone into the business to make an extra buck or two; they are all committed men of principle. In fact I know of one central banker who is so scrupulous that he will never let anyone pay for anything - even a light bite to eat. He never accepts an upgrade or any form of minor gift and takes the harshest and most unforgiving view of the rules on ethics. A legend in the industry for whom his word is his bond. I can’t see him, or his wife, accidentally buying hundreds of thousands of dollars and then doing nothing about it.
Philippe Hildebrand said mistakes were made around this transaction and that is right. But it is he, not his wife, who made them.
That is why he had to go.