Reports blame Cowen for stoking fires of 'meltdown'...
TAOISEACH Brian Cowen's overheating of the economy and failure to deflate the property bubble when he was Finance Minister will be identified today as contributing to the banking crisis.
The damning findings will be contained in two reports into the banking crisis, which senior coalition sources last night said were "devastating".
Contrary to the Taoiseach's version of events a fortnight ago, where he sought to absolve himself of blame in a major speech on the economy, Mr Cowen's budgetary policies are singled out for criticism.
The reports also:
* Attack bank directors for allowing the financial crisis to develop.
* Criticise the Financial Regulator for being too lax.
* Find the Central Bank failed to take responsibility in the overall stability of the banking system.
* Point out economic projections made by a number of organisations were wrong.
The report by Central Bank governor Prof Patrick Honohan focuses on the failures of the regulatory system operated by the Financial Regulator, Central Bank and Department of Finance.
The impact of banking, fiscal and economic policies on the banking crisis is covered in reports by international banking experts Klaus Regling and Max Watson.
The Cabinet discussed the reports at a special meeting last night, ahead of the expected publication of the findings this afternoon.
The report by Mr Regling and Mr Watson will point to lax fiscal policies in the years prior to the banking crisis -- when Mr Cowen was Finance Minister.
It will also outline how Ireland's loss of competitiveness in the run up to the crisis added to the financial collapse.
Their report will also draw attention to government spending, concluding that the expenditure plans were based on temporary revenues.
However, the Government appeared to believe they were permanent income.
The reports severely criticises bank boards. The authors are highly critical of bank directors and queries how bank boards allowed a financial crisis of this scale to occur at their banks.
The reports also question why no internal red flag was raised by individual board directors.
As widely expected, the report will be highly critical of the Financial Regulator; saying that it was far too lax in exercising its functions, failed on occasion to follow through on directives given to the banks, and moved too late to try to impose new rules to ensure the banks held more capital.
Stability
But Mr Honohan's report is also widely critical of the Central Bank for its lack of responsibility in overall stability of the banking system.
The reports will say that ministers and bankers genuinely did not know the scale of the risks they were running but that they should have been more cautious and that the Government should have taken more pre-emptive action.
An inadequate new system of banking regulation, brought in by the Fianna Fail-led Government in 2003, also played a major role in the banking crisis.
In his report, Mr Regling says: "The twin-headed bank regulatory framework in Ireland from 2003 onwards was a hybrid, by global standards.
"The new regulatory structure had emerged from a policy compromise, and this genesis did not help its credibility, or indeed encourage a focus on macroprudential risks ... . There were also some questions, in this (regulatory) framework, about ultimate responsibility and about lines of command."
The Government will point out it has already moved to deal with the regulation problem with a restructured Central Bank of Ireland.
The law to set up the reformed body is currently going through the Houses of the Oireachtas.
In his defence, Mr Cowen will point to the reports also being critical of the economic projections made by a number of organisations.
Mr Honohan says: "At no point throughout the period did the Central Bank and Financial Services Authority of Ireland staff believe that any of the (banking) institutions were facing any underlying difficulties, let alone potential insolvency problems -- even at a late stage as the crisis neared."
Mr Regling and Mr Watson say "external surveillance sources such as the IMF faired little better".
Both reports highlight that as late as May 2008, all the main forecasting bodies -- the OECD, IMF, and ESRI -- were predicting a soft landing for the Irish economy.
Report - Irish Independent.
TAOISEACH Brian Cowen's overheating of the economy and failure to deflate the property bubble when he was Finance Minister will be identified today as contributing to the banking crisis.
The damning findings will be contained in two reports into the banking crisis, which senior coalition sources last night said were "devastating".
Contrary to the Taoiseach's version of events a fortnight ago, where he sought to absolve himself of blame in a major speech on the economy, Mr Cowen's budgetary policies are singled out for criticism.
The reports also:
* Attack bank directors for allowing the financial crisis to develop.
* Criticise the Financial Regulator for being too lax.
* Find the Central Bank failed to take responsibility in the overall stability of the banking system.
* Point out economic projections made by a number of organisations were wrong.
The report by Central Bank governor Prof Patrick Honohan focuses on the failures of the regulatory system operated by the Financial Regulator, Central Bank and Department of Finance.
The impact of banking, fiscal and economic policies on the banking crisis is covered in reports by international banking experts Klaus Regling and Max Watson.
The Cabinet discussed the reports at a special meeting last night, ahead of the expected publication of the findings this afternoon.
The report by Mr Regling and Mr Watson will point to lax fiscal policies in the years prior to the banking crisis -- when Mr Cowen was Finance Minister.
It will also outline how Ireland's loss of competitiveness in the run up to the crisis added to the financial collapse.
Their report will also draw attention to government spending, concluding that the expenditure plans were based on temporary revenues.
However, the Government appeared to believe they were permanent income.
The reports severely criticises bank boards. The authors are highly critical of bank directors and queries how bank boards allowed a financial crisis of this scale to occur at their banks.
The reports also question why no internal red flag was raised by individual board directors.
As widely expected, the report will be highly critical of the Financial Regulator; saying that it was far too lax in exercising its functions, failed on occasion to follow through on directives given to the banks, and moved too late to try to impose new rules to ensure the banks held more capital.
Stability
But Mr Honohan's report is also widely critical of the Central Bank for its lack of responsibility in overall stability of the banking system.
The reports will say that ministers and bankers genuinely did not know the scale of the risks they were running but that they should have been more cautious and that the Government should have taken more pre-emptive action.
An inadequate new system of banking regulation, brought in by the Fianna Fail-led Government in 2003, also played a major role in the banking crisis.
In his report, Mr Regling says: "The twin-headed bank regulatory framework in Ireland from 2003 onwards was a hybrid, by global standards.
"The new regulatory structure had emerged from a policy compromise, and this genesis did not help its credibility, or indeed encourage a focus on macroprudential risks ... . There were also some questions, in this (regulatory) framework, about ultimate responsibility and about lines of command."
The Government will point out it has already moved to deal with the regulation problem with a restructured Central Bank of Ireland.
The law to set up the reformed body is currently going through the Houses of the Oireachtas.
In his defence, Mr Cowen will point to the reports also being critical of the economic projections made by a number of organisations.
Mr Honohan says: "At no point throughout the period did the Central Bank and Financial Services Authority of Ireland staff believe that any of the (banking) institutions were facing any underlying difficulties, let alone potential insolvency problems -- even at a late stage as the crisis neared."
Mr Regling and Mr Watson say "external surveillance sources such as the IMF faired little better".
Both reports highlight that as late as May 2008, all the main forecasting bodies -- the OECD, IMF, and ESRI -- were predicting a soft landing for the Irish economy.
Report - Irish Independent.