Banks’ Inquiry announced
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A multi-phase inquiry into the cause of our financial crisis has been outlined to the Dail by the Minister for Finance, Brian Lenihan, on behalf of the Government.
The first phase will comprise an investigation by the Governor of the Central Bank, Patrick Honohan, into the role of the Central Bank and the regulatory system and a separate report by a ‘wise person’ into the reasons why the banking system failed.
The two reports will be completed by end of May 2010. The terms of reference for the second phase, a Commission of Investigation into the banking crisis, will then be decided by the Oireachtas. The Commission will be chaired by an expert of international stature and its report will be completed by the end of the year. A third phase of the inquiry may involve an Oireachtas Committee with public hearings based on the Commission’s findings.
The scope of the Commission’s inquiry will not be limited to the performance of the banks or to the performance and structure of the regulatory system; it will also include the policy response of the Department of Finance and issues of overall economic management, the Minister said. It will further consider the macroeconomic and international regulatory environment in which the banking crisis developed.
At the time of writing, the Dail debate on the Government motion was in full swing. Fine Gael leader, Enda Kenny, emphatically rejected the Government’s approach, stating that it “sidelined the Oireachtas entirely”. The banking crisis was a “consequence of political failure”, Mr Kenny argued, and it was essential for democracy that the Oireachtas must be seen to “stand up to the plate” and demonstrate that “ we are able to do this.”
Labour’s Finance Spokesperson, Joan Burton, also demanded an Oireachtas controlled enquiry. There was a “political dynamic at the heart of our banking failure,” she charged, born of the “toxic triangle” and “golden triangle” of bankers, developers and Fianna Fail. Labour contends that the Government is seeking to shove the inquiry out beyond the next general election. They also insist that any inquiry must include decisions made by government since the crisis began, such as the bank guarantee, the nationalisation of Anglo-Irish Bank and NAMA.
Fine Gael’s Michael Noonan suggested that the Government has missed the point of the public need for a kind of catharsis, which cannot be satisfied by an inquiry, the crucial phases of which are conducted out of the public gaze. He further asked the Minister to make a commitment to include a ‘catch all provision’, covering the adequacy of response of state agencies, Departments and previous Ministers of Finance to be written into the terms of reference for the Commission of Inquiry.
I may be politically naive but I am reasonably satisfied with this plan; it is a staged process which suggests intent of neutrality and discovery.
I think Burton, Noonan and Kenny’s comments are just hyperbolic; although a drawn out public catharsis would be good entertainment it would paralyse politics for too long.
This way we hope the revelations come out in efficient and cost effective fashion when they eventually do come out…
I am interested in reading other more jaundiced views.
I love the idea of a ” wise person” passing judgement on our bankers!
I wonder will he be wise enough to hang around and help fix the mess? Or
will he be like the rest of us post-boom hero-to-zero merchants; will he just be “wise after the event”.
I am not happy with this proposal by Fianna Fail at all, it won’t be cost efficient it will take too long there is too much scope to prolong the enquiry, would we ever see the truth or the answers to what went wrong!
We need an open and transparent enquiry that is quick in nature!! Not one that drags on and on and the cost of the tax payers.
We need honesty and action from FF not cloak and daggers and side stepping around the issue!
This is just another fudge with no real action being seen at the end of it!
I’m reasonably happy with the proposal. Honohan is, or perhaps like Alan Ahearne, was an impartial voice until he joined the political classes and hopefully will get to the bottom of why the regulatory system failed so miserably in Ireland. Although, what exactly is going to be found out that we don’t already know??
As for the “special person”, I’m less happy with this. The bankers should be forced before a public committee that should be televised like the Iraq invasion investigation happenening in Britain at the moment. I disagree with the people who say this would be hyperbolic and an unneccesary circus act. The least the public deserve is to see Seanie Fitz and Co. explain themselves to us in front of the cameras…and god forbid, apologise. Fat bloody chance.
Stephen,
The Commission, as appointed under the Act, will have the power to have hearings in private or in public as it sees fit; something along the lines of the Iraq inquiry (Chilcott) in the UK, which is conducting some of its evidence-taking in public and some in private. The alternative ‘heads on spikes ‘ approach would collapse very quickly for a wide variety of reasons and would end up with no findings of any use and no credibility as an exercise.
Just in case the initial report was no clear, all the Central Bank Governor and the ‘wise person’ are engaged in is an initial ’scoping’ exercise, basically to discover what the questions, central areas of concern etc. should be for the Commission that follows as the second phase. At the final stage, the Oireacthas Committee will be entitled to have public hearings on the Commission’s findings. Plenty of opportunity there for punbic entertainment at various points along the line!
One component of their 1st stage is an Irish style Turner report — which Turner did nearly a year ago for the UK. The lapse in time in getting around to a full diagnostic report is amazing — and yet they are going ahead with merger of Central Bank and Financial Regulator. Surgery without knowing the disease.
And in contrast to the decision to take crisis decisions out of the purview of the inquiry, the US Fed has just agreed to have a full audit of all aspects of the AIG bailout, which is the political equivalent of the bank guarantee in Ireland i.e. the huge commitment that still looks fishy to the general public.
#P O’Neill
The AIG bailout audit is not so transparent as you might believe. Part of its terms have been rendered secret until 2018 by the SEC. I’ve been very surprised there hasn’t been uproar about this across the pond.
http://www.reuters.com/article/idUSN1116982020100111