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Financial Regulator Asleep On The Job

Posted on: October 3rd, 2008

As the Senate came back into session there was a rush to push through the Credit Bill to provide assurances for the market. Praise was heaped upon Minister Lenihan. I tried to bring some calm perspective on the hysteria when I spoke to the Senate.

I see very little point in an appeal for bipartisanship on this issue. I regret the chorus of congratulations from the Government to the Minister for Finance on what he has done.

I said that because I have no opinion at this stage on what sort of Minister for Finance he is. It is ridiculous to get up here and congratulate him on his speedy performance and actions. The man did it because he had to. The banks came to him begging him to do something about the situation, otherwise catastrophe would have hit us today. I do not know what they said to him. I presume, and the markets were signalling clearly yesterday, that a bank here was going to go under if we did not do something very quickly.

Let us not congratulate the Minister on this. What has actually happened in Irish banking history in the past four years is that the banks have been running rings around the Government, pulling the wool over their eyes, or worse still, doing things to which the Government has turned a blind eye.

Let us not say this was a great job done overnight. It was a last resort. What has been done is phenomenal in terms of figures. We have given guarantees of €400 billion to €500 billion. That probably will never be called on. It is nearly half of the figure being talked about in the USA, which is $700 billion. Let us not say it is realistic and congratulate the Minister. Why in the name of God did he not sack the Financial Regulator? For the past four or five years, the banks have been allowed, by the Financial Regulator, to lend money on 100% loan, and to lend money to property developers to whom they should not have lent any money, and they have gone berserk. There is only one body in this country that can stop that, and that is the Financial Regulator. The Financial Regulator has been asleep on the job. It is not the Minister’s job to rescue shareholders; I do not give a hoot about shareholders, that is their problem. When this is over and the shares have rallied, are we going to have the same people doing the same things with the same problem? There is no evidence of a change of personnel or regulation at this stage. I asked the Leader to address this point.

Let us forget about the fact that depositors are being rescued and underwritten. The same problem will exist tomorrow and the banks will be just as insolvent tomorrow, with the same loans and property developers looking for huge amounts of money. How will that be tackled? That will come up and bite us next week when we realise the depositors are all right.