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Let Patrick Lead the Probe

Posted on: January 17th, 2010

PATRICK Honohan has made a dream start as governor of the Central Bank. He is already gloriously offside with the Government, his patrons. Brownie points for Patrick.

Brian Cowen must be spitting blood at the governor’s call for an inquiry into what went wrong in the banks. Brian Lenihan’s protegee had poked the Taoiseach in the eye. Initially, Cowen politely rubbished the governor’s idea but it has gained legs galore as every day passes.

Patrick has begun a bit of a bandwagon.

It is probably slightly embarrassing for Patrick that all the opposition parties have joined his crusade. His demand for an inquiry has been politicised.

Last week, Labour’s Pat Rabbitte published a bill enabling an inquiry. Fine Gael leader Enda Kenny lined up right behind him — and even Cowen’s coalition partner, Green Party leader John Gormley, is in the vanguard of those demanding that we find out how the banks managed to bust Ireland.

Cowen is trying to head them off at the pass with some fast footwork. Wait for the formula or “framework” to be announced this week. More ominously, the Government is signalling that nothing will happen immediately. Delay is the currency of politicians.

The Cowen “framework” sounds like a fudge to pacify Gormley and keep Patrick onside.

The last thing that the Government wants is a Central Bank governor who goes walkabout. It is all very well appointing independent guys like Patrick, plucked from academia, to do the nation’s business; but when they start taking all that independent guff seriously, that is a far more serious matter.

Patrick has caused havoc in the Cabinet. Ministers have been paraded out to give all the normal bogus reasons why there should be no immediate inquiry, meaning, of course, that there was never any intention to hold one at all.

“The timing of an inquiry now would be all wrong,” they sing in chorus.

It would prejudice Nama; bankers are too busy; government ministers must keep their eye on the ball; it would damage Ireland’s image abroad. Blah, blah, blah.

Yet, one of their objections carries credibility: the claim that an Oireachtas inquiry would be politicised; that opposition TDs and senators would use it as a platform to bash the Government; that it would become political theatre rather than a forensic probe; that the Taoiseach — as the Minister for Finance at the time of the madness — would be the real target and that the guilty bankers would escape, lost in the politicians’ anxiety to draw blood from their opponents.

On that score — and on that score alone — the critics could be right. In their craving to take lumps out of their rivals, TDs could let the bankers off the hook.

Fortunately, there is an alternative.

Patrick should hold the inquiry.

And he should chair it himself.

If the new governor of the Central Bank was to announce that he was setting up a full- blooded inquiry into the behaviour of the banks, who would dare to boycott it?

He is their regulator. That is his job.

Certainly no bankers would refuse to turn up.

Patrick is, after all, their boss.

Last week at the Bank of Ireland EGM the BoI governor, Pat Molloy, promised to co-operate with any inquiry set up by the Government. Several bankers are making similar sounds, possibly content with the comfort that the Government is hell-bent on delay or dilution.

So let us give them a bit of a nasty surprise.

Let us test their sincerity by allowing their boss, the governor of the Central Bank, to ask the questions.

Patrick Honohan carries no banking baggage. He owes no favours to minister or mandarin.

Cabinet members would hardly boycott their own appointee’s inquiry. All the staff in the Central Bank, employees of the Financial Regulator and all the Department of Finance insiders would be obliged to attend.

Would Bernard McNamara, Paddy Kelly, Sean Dunne and other developers shun the Governor’s initiative? Judging by Bernard’s willingness to give a long interview to RTE’s Mary Wilson on Drivetime last week, he is now happy to present his case to the public. Besides, the inquiry will discover how bankers lent money to builders, not about how the builders went bust.

The builders’ story is simple: they were licensed lunatics, greedily grabbing whatever they could borrow in pursuit of billions.

Besides, the builders are now, like Bernard, all bust. So is the country. So are the banks. So are the small shareholders. The bankers are not. They are, in the words of Labour Finance spokesperson Joan Burton, still living “high on the hog”.

A few weeks ago, Patrick himself suggested that the inquiry should ask social as well as banking questions. Dead on. The first question society should ask is how so many of those who resigned from faltering banks in the last year remain among the richest people in Ireland?

How are so many mandarins still in the same jobs? How many of the staff at the Regulator’s office remain in their safe perches? Is Patrick Neary, the deposed regulator, the fall guy for a totally rotten institution? Were the Revenue Commissioners in the loop?

Would Patrick Honohan’s probe work?

Why not?

He will need help.

Like a panel of untainted experts without an agenda.

Mercifully, there is no longer any need for the mandatory robot from the “social partners”. The customary gig for the militant brother and the fool from Ibec is now a perk of the past. There are plenty of good ex-bankers floating around who retired long before the proverbial property excrement hit the fan.

Professor Niamh Brennan should be asked to step down from her bed of nails as chairman of the Dublin Docklands Development Authority to embark upon this colossal task. Niamh is a former director of Ulster Bank. Her commitment to corporate governance is unmatched.

Tim McCormick, a chartered accountant who left banking after 17 years back in 1990, would be ideal. He understands banking following a distinguished career in the Northern Bank. He carries no personal taint because he made his exit a decade before the property frenzy. He has an MBA, and is today an author with a mind like a razor.

Eddie Hobbs, no favourite of the establishment, would carry credibility among many of the public — especially the bankers’ customers.

Ex-politicians should not be barred. Who better than former Taoiseach Garret FitzGerald? Garret may have a few barmy ideas but his commitment to the truth is hardly in question. He would dig and dig and dig.

Even the bankers could not bellyache about Garret. Was he not the Taoiseach who bailed out AIB’s Insurance Corporation of Ireland in 1985? Let us forgive him for that if he is prepared to rally to the nation’s call once again.

The governor should appoint two members from outside Ireland. There are scores of capable people willing to take on the task.

And even Brian Cowen could not claim that this was a political circus, determined to score points against Fianna Fail.

Neither Patrick Neary nor Sean FitzPatrick could protest that they were not receiving a fair hearing from such rigorous but level-headed people. Nor could such a probe be dubbed a witch-hunt.

Over to you, Patrick.