I spoke in the Seanad this week on the Statements on the Regling and Watson Banking Reports. If these reports tell us anything, it is that the financial collapse was a home grown problem. The crisis may have been triggered by the collapse of Lehman Brothers but it was created by the property bubble in Ireland and reckless fiscal extravagance.
Below are some excerpts from my speech in the Seanad.
It is a pity that these reports, which I welcome, have been used for some quite sophisticated spinning. It is a pity that the Government sat on them for ten days as I cannot discern any reason this was necessary, except to digest them and then use them for its own purposes. Perhaps the Government feared the reports more than it needed to and therefore wished to gain a presentational advantage over the Opposition, which of course intended to use them against the Government.
The bankers have very cleverly kept their heads down. One has not heard a banker talking about this report at all on the media and they have left people in Leinster House to squabble among themselves about whether the Government or the Taoiseach is to blame.
We should refocus on the bankers, those people who were the principal players in this unpleasant drama which has been going on for many years.
They would disagree with some of the things I have said.
It is only fair to say that they seem to have drawn a line between what happened prior to approximately 30 September 2008 and what happened after that date. Prior to that date they said that everything that was done by the major players, namely, the Government, the regulator and the banks was wrong. It was a mistake, a conspiracy. All sorts of other pejorative terms were used. However, they said the Government’s crisis management was carried out rather well. That is really saying the Government created a complete and utter mess but when it came to dealing with the crisis it was repaired reasonably well in the emergency or fire brigade sense. Both Professor Honohan and Messrs. Regling and Watson were fairly approving of areas such as NAMA which I personally do not feel committed to at all, in fact I am critical of it. They were fairly approving of the bank guarantee and they did say things about what has happened since then which would be unpalatable to the Opposition and music to the ears of the Government.
I have found an extraordinary acceptance of what they say and a reluctance to challenge these three gentlemen which is very odd because there are elements in the reports and in what they said which are pretty staggering. Several politicians who were not necessarily trying to score political points, and rarely try to do so, asked them about the Department of Finance. When they were asked about the Department of Finance all three of them seemed to run for cover. That is quite odd because most people’s understanding of the Department of Finance is that it is the most powerful Department in the State, that in many cases it is far more powerful than the Minister for Finance not just because it is permanent but because it is the fount of all the information and that it has overall statutory and supervisory powers over the regulator. It has a major influence on the Minister and to a large extent it writes the budgets and the financial laws of this country and, traditionally, spins its own agenda in a way which could be interpreted as dangerous but is certainly potent. For those two reports to say they are not going to tackle that particular problem and for the gentlemen when faced with questioning about it not to be willing to take on the Department of Finance is alarming.
The Department of Finance is coming under increasing scrutiny. Certain people who are ex-employees are now beginning to write things about it. The Department needs to be challenged, questioned, interrogated and investigated with exactly the same rigour as has been applied to the banks, the bankers, the regulators and the politicians. Throughout this entire saga it became evident how the individual mandarins and civil servants, their way of promotion, the influence they have, how they operate and interact with the Central Bank is a dark and mysterious area.
There are powerful people in the Department who have influence on the Central Bank and the regulator. The Secretary General of the Department of Finance always became Governor of the Central Bank up to the appointment of Professor Honohan. That is at least a symbol of the connection between them and how they are joined at the hip. That area must be subject to the same investigation. The Department of Finance was not mentioned among the terms of reference for the next report. Neither did Regling and Watson list it among the matters that should be subject to further investigation. What we need to find out is whether there are hidden hands controlling or allowing things to happen which we do not know about. The responsibility of that Department is equally important to the other organisations we found to be culpable.