Government still avoiding public inquiry into the economic crash...
The Government coalition parties did not want a comprehensive public inquiry into the reasons for the banking and economic crash. Instead, they have ended up reluctantly endorsing no less than three mini-inquiries into aspects of the banks here that will, of course, be conducted largely in private.
In January, Taoiseach Brian Cowen endorsed setting up two inquiries - one into the evident failures of the financial regulator in recent years and the reckless amounts of money advanced by the banks. The new broom at the central bank, the TCD academic Patrick Honohan, said he favoured a banking inquiry. Governor Honohan then set out to report on the huge failings of the reformed organisation he now leads.
Separately, two outsiders, the German Klaus Regling and Englishman Max Watson, were appointed to investigate the reckless lending by the bankers. Messrs Regling and Watson reportedly talked to a clutch of Ireland's formers chief bankers. It is not clear whether they approached the large group of bankers who continue to sit on the boards of the taxpayer-supported lenders. We will never know because both inquiries were held in private, in camera or in secret - depending on one's faith in inquiries commissioned by the Government which set the terms of reference.
Last week, almost by accident, the Irish public was given a third banking inquiry when Environment Minister John Gormley released the leaked reports he commissioned into the scandal-ridden Dublin Docklands Development Authority (DDDA) in recent years. The minister decided to appoint the public-spending watchdog, the Comptroller & Auditor General, which will report to the Oireachtas Public Accounts Committee. This report is a banking inquiry by proxy because two banks were involved in financing a developer and the DDDA of the 25-acre plot of contaminated land known as the Irish Glass Bottle site.
The DDDA had decided to mix and match its roles as planning regulator and developer in late 2006 just as the economic bubble was about to burst. Two Anglo Irish Bank board members sat on the DDDA board at the time. In a bit or reverse alchemy, the publicly-owned body turned an initial small investment into a loss of at least €400m for the taxpayer.
Commercially, valuable buildings can probably never be built on the 25-acres because parts of the site continue to emit methane, a legacy of its use as a major tip-head for Dublin waste for many years. Residents of the Poolbeg peninsula may in time be bequeathed the most expensive parkland in Europe.
I have argued here before that the public needs some sort of banking inquiry that would investigate the docklands. Instead, we have ended up with not one inquiry but three disconnected inquiries whose investigations will be held in mostly in private. Significantly, the controversial political decision taken by the Minister for Finance, Brian Lenihan, and Taoiseach, Brian Cowen, on 30th September 2008 will not be investigated by any inquiry.
In a late night meeting, the Government, after consulting with the then two top bosses at AIB and the then top two at Bank of Ireland, extended a State guarantee to cover all the liabilities - the bond debt and deposits - of the Irish banks, including Anglo Irish. An economy worth €170bn a year would guarantee the balance sheets of banks worth over €400bn.
Taxpayers would then be asked to pump many billions of euro into Anglo Irish at a time when the amount of taxes the Government collected from taxpayers was sliding. The fragile nature of the guarantee was quickly tested. Within months, the strains very quickly showed and spilled over onto the sovereign bond markets. The interest rate the Republic had to pay to service its sovereign debt late last year soared to over six per cent before falling back again. But the crisis continues this week because Irish sovereign interest rates, already the second most expensive in the eurozone after Greece, continue to creep higher.
A public inquiry into the reasons for the banking and economic bust remains the only inquiry that is worth conducting. Governor Honohan's private inquiry, when it is published, will likely tell us what we already know: his predecessors did not do their job. The first Regling and Watson report into the banks will also tell us what we already know: reckless bankers loaned huge sums of money on a scale not seen anywhere else in the world to a small group of property borrowers.
As the economic crisis worsens, the public will put up with nothing less than a proper inquiry, conducted in public.
Report - The Meath Chronicle.
The Government coalition parties did not want a comprehensive public inquiry into the reasons for the banking and economic crash. Instead, they have ended up reluctantly endorsing no less than three mini-inquiries into aspects of the banks here that will, of course, be conducted largely in private.
In January, Taoiseach Brian Cowen endorsed setting up two inquiries - one into the evident failures of the financial regulator in recent years and the reckless amounts of money advanced by the banks. The new broom at the central bank, the TCD academic Patrick Honohan, said he favoured a banking inquiry. Governor Honohan then set out to report on the huge failings of the reformed organisation he now leads.
Separately, two outsiders, the German Klaus Regling and Englishman Max Watson, were appointed to investigate the reckless lending by the bankers. Messrs Regling and Watson reportedly talked to a clutch of Ireland's formers chief bankers. It is not clear whether they approached the large group of bankers who continue to sit on the boards of the taxpayer-supported lenders. We will never know because both inquiries were held in private, in camera or in secret - depending on one's faith in inquiries commissioned by the Government which set the terms of reference.
Last week, almost by accident, the Irish public was given a third banking inquiry when Environment Minister John Gormley released the leaked reports he commissioned into the scandal-ridden Dublin Docklands Development Authority (DDDA) in recent years. The minister decided to appoint the public-spending watchdog, the Comptroller & Auditor General, which will report to the Oireachtas Public Accounts Committee. This report is a banking inquiry by proxy because two banks were involved in financing a developer and the DDDA of the 25-acre plot of contaminated land known as the Irish Glass Bottle site.
The DDDA had decided to mix and match its roles as planning regulator and developer in late 2006 just as the economic bubble was about to burst. Two Anglo Irish Bank board members sat on the DDDA board at the time. In a bit or reverse alchemy, the publicly-owned body turned an initial small investment into a loss of at least €400m for the taxpayer.
Commercially, valuable buildings can probably never be built on the 25-acres because parts of the site continue to emit methane, a legacy of its use as a major tip-head for Dublin waste for many years. Residents of the Poolbeg peninsula may in time be bequeathed the most expensive parkland in Europe.
I have argued here before that the public needs some sort of banking inquiry that would investigate the docklands. Instead, we have ended up with not one inquiry but three disconnected inquiries whose investigations will be held in mostly in private. Significantly, the controversial political decision taken by the Minister for Finance, Brian Lenihan, and Taoiseach, Brian Cowen, on 30th September 2008 will not be investigated by any inquiry.
In a late night meeting, the Government, after consulting with the then two top bosses at AIB and the then top two at Bank of Ireland, extended a State guarantee to cover all the liabilities - the bond debt and deposits - of the Irish banks, including Anglo Irish. An economy worth €170bn a year would guarantee the balance sheets of banks worth over €400bn.
Taxpayers would then be asked to pump many billions of euro into Anglo Irish at a time when the amount of taxes the Government collected from taxpayers was sliding. The fragile nature of the guarantee was quickly tested. Within months, the strains very quickly showed and spilled over onto the sovereign bond markets. The interest rate the Republic had to pay to service its sovereign debt late last year soared to over six per cent before falling back again. But the crisis continues this week because Irish sovereign interest rates, already the second most expensive in the eurozone after Greece, continue to creep higher.
A public inquiry into the reasons for the banking and economic bust remains the only inquiry that is worth conducting. Governor Honohan's private inquiry, when it is published, will likely tell us what we already know: his predecessors did not do their job. The first Regling and Watson report into the banks will also tell us what we already know: reckless bankers loaned huge sums of money on a scale not seen anywhere else in the world to a small group of property borrowers.
As the economic crisis worsens, the public will put up with nothing less than a proper inquiry, conducted in public.
Report - The Meath Chronicle.