51 replies on “Honohan Testimony to Oireachtas Committee”
This is the first time the Governor has called for an inquiry into the collapse of the Irish commercial banks, whose losses equal or exceed their entire equity capital.
Almost all the losses were incurred lending money to Irish customers, and the collapse would have been precipitated by some other event had Lehman been rescued. This is an Irish story.
The failure to date to provide the public with a detailed narrative, including the regulatory and supervisory failure, has fuelled public resistance to budgetary tightening, and may yet damage the collectability of debt. The (accurate) perception that the bankers have got off lightly provides the moral escape-hatch to strategic default.
The government should see a full inquiry as the next necessary building block in the construction of public support for the period of austerity which has to be endured.
In the past, major business fiascos in Ireland did not cause crises for Irish banks, partly because they used to have an idea what was going on and let foreign banks take the shaky business and suffer the consequences. Larry Goodman and Bray Travel are two cases that come to mind. Why was it so different this time?
Also, I think the distinction between bank equity investors who did not get off lightly and bankers who did needs to be made more often.
Finally, it could be very interesting to know more about characteristics of the current non-government shareholders. Has anyone done any analysis?
Does the CAB have sufficient powers to seize in case of fraud?
Public outrage is only going to be satisfied by real pain. Particularly when the repossessions start.
This is not about borrowers anymore in the public perception, it is about lenders.
The government do not want a full inquiry because it will show that they were one of the main causes of the crisis. With elections in the offing they can do without reports which would play into the hands of opposition parties.
When the repossessions become serious, they do not want to put useful documents into the hands of those that are having their properties re-possessed. Documents which would show definitively that the products they were sold were not regulated by the financial regulator as stated on the contract. Documents which would highlight the reckless trading of the financial institutions. The availability of these documents most likely would impact the decision of the court in favor of the mortgage holder and cause the banks to sustain even greater losses. Is this what the government would like to see happening?
These documents would also show that the government.
(a) helped to inflate property prices with all sorts of tax incentives
(b) failed with fiscal policies to halt the madcap lending policies and to reign in the tax incentivised building spree which had gripped the state, for fear of loosing tax revenues.
@Philip Lane
“For this reason, following discussions with Matthew Elderfield, the new head of financial supervision, who will be starting in a few weeks, we have decided to make a senior appointment to take charge of enforcement.”
First we thought Honohan was to be our Eliot Ness. Then it was to be Elderfield. Now it’s “senior appointment TBA”.
Standard Irish establishment practice – always appear to be on the verge of action while insulating yourself from responsibility to the maximum.
“As you know there have been high-profile allegations of wrongdoing in the context of the banking crisis. I do not wish to talk in any detail about these (indeed I cannot do so) [Patrick – try staying in your office and reading the old files!] beyond saying that, detailed investigations of these are in progress and the regulatory staff have contributed vigorously to this process.”
One year and three months after the bank guarantee (which almost destroyed the country) they’re still in the looking into phase. Why aren’t all banks in the country being investigated rather than just the high-profile ones?
Standard Irish establishment practice 2 – investigate as little as possible and as slowly as possible and defend your institution unreservedly.
“At the same time, since these loans are to be purchased by NAMA at “long-term economic values” (not far above current market prices)…”
Some would say that €7 Bn is very far. As for current market prices, the asking prices for new Dublin residential property, the elite parts of the banks property loans, are down 50%. That’s the discount NAMA’s valuer is applying to everything, from the floodplains of Munster to the 216,000 and growing empty properties. Clearly we will be massively overpaying: €65Bn plus economic cost and no extra lending according to Morgan Kelly’s work.
Standard Irish establishment practice 3 – defend the government right or wrong.
I welcome his call for an inquiry, following on from Colm McCarthy’s, but he seems to be prejudging its outcome:
“The crisis is not simply a question of discovering who did what and who knew what. Uncovering the deep roots of the crisis will require expertise and broad social scientific understanding more than merely forensic skills.”
There are no deep roots and no complexity, not even that provided by extensive subprime lending as in America. It is absolutely clear that a property/lending bubble was recklessly driven by an evil triangle of FF/PDs /bankers/developers. “who did what and who knew what”, is exactly what we need to know. The deeper truth that needs to be investigated is why people like Fitzgerald and Honohan ignore this and go looking for deeper roots. A sceptical person would say that the main reason is because it gets our establishment off the hook for any blame – Standard Irish establishment practice 4.
Honohan keeps laying the blame for the mass insolvency of our banks on Basel 2 and errors in regulatory philosophy. The thesis that it was all Basel is faulty. If he is not careful Basel Faulty is the moniker he will be remembered by.
There was some good stuff:
His comments on whistleblowers are encouraging.
His statements about carefully regulating the IFSC mean that there is now a slight chance that Irish registered institutions will not destroy global capitalism.
He has good ideas about increased bank lending.
But overall it was very disappointing.
@All
On reading Colm McCarthy’s comments I may have been overly harsh on Honohan. He has very good ideas about the future of Irish banking. The present of Irish banking seems to be safe in his hands too. The problem is the past. Why he took the job without getting cast iron assurances on the resolution of the past of Irish banking escapes me.
However, he has now rectified that. Effectively he has gone as far as he can do in his position to call for an inquiry. I congratulate him for doing so. Let’s all hope his call is front page news tomorrow.
@ E65Bn…
Be patient. This kind of public statement will always be somewhat dry as it’s necessary for someone in Honohan’s position to be very diplomatic.
I know it’s frustrating to be asked to be patient on this, but Honohan has a very good rep and has earned the right to a little more confidence imo.
@ David O’Donnell & E65Bn plus interest and NO extra lending!
Here is the body of an email I sent to Pat Kenny one year ago to the day. He did air it and was shot down by the anti-nationalisation argument.
I cannot reproduce the accompanying table in WordPress but the market values were as follows.
———————————————————————————————————
Name / Shares In Issue / Price / Market Value
Anglo Irish Banks / 759,952,175 / 0.377 / 286,501,970
Allied Irish Bank / 880,661,066 / 1.980 / 1,743,708,911
Bank Of Ireland / 1,004,193,740 / 0.880 / 883,690,491
Irish Life & Permanent / 276,782,351 / 1.520 / 420,709,174
Total stock market value one year ago = €3,334,610,545
“Pat
Brian Lenihan could buy the entire quoted Irish Banking System for €3.3Bn and still have €6.7 left over to fund credit for “real” business.
No dividend payments for five years.
Properly consolidate the sector (Swedish style).
And then sell the restructured entities at a later date (for 5? 6? 7? Billion)
Why bother with preference shares if you can own the whole lot?
The Country is already on the hook for €500Bn in any event. Providing €10Bn in Preference shares does the tax payer no good.”
———————————————————————————————————
So, in short the entire quoted banking system could have been taken over by the State for less than the “investment” in Anglo Irish Bank.
Every single shareholder could have received full market value (including Anglo).
Irish Life & Permanent would by now have been re-privatised at a gain of (what) €2bn?
Instead we have NAMA. We have already “invested” €11bn and not a shred of equity.
We will (under Fianna Fail and the Greens) “invest” another (what) €10bn?
That is €21bn of Citizen/Taxpayer money utterly squandered by Fianna Fail & the Greens.
Remember, we have already guaranteed the entire balance sheets of these institutions.
Why did we waste €11bn hard cash? Why another €10/€11/….€15Bn?
Why another €70bn into NAMA.
I am beginning to think this is government by the insane.
But as long as the Stag is not stressed God will look kindly upon us and grant us absolution from insanity.
@ E65Bn…
Oh, just saw our second post. Seems you don’t need my advice after all!
@ Antoin Daltún
“Also, I think the distinction between bank equity investors who did not get off lightly and bankers who did needs to be made more often.”
Antoin,
I think it would be even more useful if you (no offence) and others changed your use of words.
You have been led into a cul-de-sac of blaming “bankers”. People immediately think of overpaid executives.
They are not the bankers. The Bond Holders are the “Bankers”.
I would suggest that you change your mind when thinking of this crisis. Don’t allow your mind be infected by the “idea” of “bankers”.
Replace that word in your mind with BONDHOLDERS.
Thanks for linking to the document Philip. I hope to read through it tomorrow.
@Greg
Your point about bondholders is well made. When we remember that they were insured against losses their treatment is inexplicable.
Your other point about nationalisation is also irrefutable. We could have bought all these banks outright for €3 Bn and instead put in €7 Bn into AIB and BOI in ways that expressly prevented this? It defies belief. Now through NAMA we will lose another €65 Bn but we are still debating exactly what portion of ownership we will have in these insolvent institutions? Simply astounding.
@Marcus OC
I never doubted that Honohan’s intentions were good. I was more afraid that as an expert on bank crises he had simply said to himself,
“Politicians and bankers, what can you do. No point in new investigations, we know what happened so it will only destabilise things”. I believe this would be the wrong approach and I congratulate him for calling for an enquiry. As of 6.30 PM it only got one line in a minor story on The Irish Times site and I don’t see any mention of it yet on the Independent site.
It is the first call for an enquiry that I am aware of by a senior public servant so I think it deserves the front page and a ringing editorial from The Irish Times.
I note that Prof. Honohan is calling for an enquiry which will yield a deeper understanding of why our banking failure came about. He suggests the enquiry needs to go beyond who knew what and who did what. This is the opposite of the interpretation I placed on Colm McCarthy’s call for an enquiry in the discussion about Colm McCarthy’s SBP article on unfinished business in the banking sector. I wonder are Patrick Honohan and Colm McCarthy talking about the same type of enquiry?
It’s unclear to me whether the inquiry called for is solely into how the banks ended up in the situation where they received the guarantee (a very important issue), or whether it is also into the details of how, and on what and whose advice, the granting of the guarantee was done (an equally important issue).
This is the second time in just 25 years that the banking sector has come pleading “too big to fail”; as with AIB and ICI the government appears to have swallowed that line (over a panicky weekend, both times), to the cost of taxpayers.*
*I do not believe the numbers produced to wish away the cost of ICI. No provision was made in them, as far as I know, for either the additional cost of servicing our national debt from the assumption (without even an equity stake) of AIB’s liabilities, nor the opportunity cost of the whole debacle.
@Philip Lane
Thanks for the early morning read – must say that wider hat appears to suit The Governor. Think we all need get into new models. This is a positive start.
“Support from the European Central Bank, after the banks were guaranteed in September of last year, helped save our bacon, he added.
“Were we not in the euro zone in the last year, our banking crisis could have resulted in a general collapse of the State,” Mr Lenihan said in Brussels.”
If that doesn’t deserve to be enquired into what does?
Why do we not see this sort of tone being used about FF/bankers/Developers, the evil triangle?
I counted six uses of “”commercial” semi-states.” But the worst bit is here:
“At the first sign of any nonsense from semi-state managements or trade unions the finance minister should spell out the brutal facts of economic life to them. Any attempt to circumvent the minister’s demand for pay cuts through legal action or other means must be quickly punished.”
1 year and three months later we rarely hear our media loudly demanding punishment of any kind for our country’s destroyers. To them workers are much more deserving of quick punishment than the evil triangle.
@Philip Lane
Let me add my thanks to you for linking to the document. And there is good news – the call made the front page of The Irish Times website:
“Your other point about nationalisation is also irrefutable.”
Lovely word that. Irrefutable.
And it is precise.
I defy anyone commenting on this blog to refute that on this exact day last year there was any substantial argument not to nationalise the entire quoted value of bank licence holders with full compensation for the market value at that time.
There is no getting away from the FACT that Fianna Fail & the Greens could have taken €3.5bn of the public purse (a lesser amount than the Green Party agreed to waste on that stinking cadaver that is Anglo Irish) and had ownership of the entire of domestic banking franchise.
Irrefutable.
Correct.
It has occurred to me that Priests and Bishops owe allegiance to a Foreign State.
It is now occurring to me that Fianna Fail & the Greens also owe allegiance to a Foreign State.
@ E65Bn plus economic costs and NO extra lending!
“Your point about bondholders is well made. When we remember that they were insured against losses their treatment is inexplicable.”
Yes.
It is so commonplace in my mind (and yours) that all of this was AND IS insured that I sometimes forget it.
Ya see, the thing I’m just not getting here E65Bn plus economic costs and NO extra lending!, is this.
Why?
Why?
Why?
Why?
Derivative time bomb?
Prof Honohan made the point that the CB would be taking pay cuts (15% in the case of the new regulator, or €60k).
Is there any likelihood of the guaranteed institutions taking the same pay hits – the ordinary workers, not just the CEOs, as is the case in the public service?
@ Philip
I will get around to reading Citizen Honohan’s “opinion”.
But I must admit I cannot find any reason why there is a need for Citizen Honohan to offer an opinion.
yoganmahew
The CAB does have power to seize the proceeds of crime even in the absence of a determination by a criminal court that there has been a crime. The presumption is against the person who has property seized. Taxes must also be paid on illegal proceeds, but only if the proceeds are retained. With penalties etc the usual tax haul is 100% of the proceeds found. And there are social welfare officers there too! And Customs, mainly for info purposes and liasing but they are expert rummagers. Not very attractive but all good blokes.
But it is under the complete control of good ol Fachtna! Who would never lie nor leak stuff to the Indo.
Never happen! Not at the political level. And expect a better class of lawyer to act for the “owners”!
The DIRT Inquiry was a whitewash as to how the banks were encouraged not to deduct DIRT etc. But it was an excellent Inquiry ……..
The 9/11 Commission is widely regarded as the same and I believe that many of the members of it realize that they were not fed anything like the truth…….
Do we want to find out? What would we do then? Surely we do want a whitewash that everyone can believe in. The UK has decided to rein in coroners inquests just as calls for the Dr Kelly case to go to the coroner. Do we need to waste money when we already know what happened but not who nor how much passed in secret accounts? What good would it do? The public would push for criminal sanctions and then where would we be. Keep a lid on it. Solidarity. Peace. Mine’s a treble Jameson
I suspect Citizen Honohan has met some internal difficulties……. This call is beyond his remit. This is usually issued when the desired results have already been arrived at. I doubt such a process has happened.
Is he kicking over the traces? Good for him but is he being effective? He is only a wet week in the job and yet he is looking to be the victim of a nasty hit and run. He does not say he has discovered that anything was wrong, ie he adds nothing to what all of us know already. So why him to speak out? He has no resources for such an Inquiry. Is he merely motivating a bankster or two to heel? It certainly is not aimed at the government that appointed him. If I were he I would have had someone a little higher in the foodchain issue the idea rather than declare it so, unless it had been cleared at the highest levels.
Has he got a good parachute?
Chow and Lie has a good point and even if an enquiry ever develops into an Inquiry, then it will have very precise terms.
Greg
Yes. I have been hinting as much for some time. Remember the Calvi affair? Masonry is at the heart of banking.
We do not ask those who swear truth or true service as public servants whther they have already sworn never to act against the interests of any class of persons. Why not?
We know the public service is riddled with Catholic and Judaeo/protestant Freemasonry. Do we care? What does an oath mean to a Godless society?
Antoin Daltún
I believe that some reckless young economists threatened their future careers by analysing European stockholdings and found that there were a very few very large holders of these “choses in action”. The found some differences between the US situation. They did not publish juicy details but were guarded.
We have to ask where did the Rockefeller divestments go? What of the fabled Rothschild wealth?
Having fewer governments makes it easier to deal with the right people for those “in business”! NWO here we come!
Alan Ahearne? Once respected and now villified on this site.
Alan Dukes? Once respected and now villified on this site.
Garrett Fitzgerald? Once respected and now villified on this site.
And now? Patrick Honohan? Once respected and the comments are now starting to turn towards villification on this site.
Its becoming a sad joke on here. Ever thought that some of these guys see a bigger picture which is not as a simple as total bank nationalisation? But yeah, you’re right, you guys know better…
@ Greg
in todays IT “he conceded that State ownership of one or both of the two biggest banks – Allied Irish Banks and Bank of Ireland – may rise to 50 per cent”.
Why only 50% is there a brick wall at 50%, is there a line in the sand an armageddon? We pump all this money in to get 49.99% Why?
@ Greg and E65
Nationalising the banks last year would not have meant a €3.3bn spend by the govt to get control of the banks, it would have gotten them for “free”. They were insolvent (still are) and shareholders would not have to be compensated. As we found out last week for Northern Rock (and will soon for Anglo), shareholders are entitled to nothing as the intrinsic value of the shares has been deemed worthless.
BRAVO! Prof Honohan.
Finally, a man of courage and integrity steps forward.
This is indeed the beginning of what will be a long hard fight to put our economy back on a sound footing.
It is now necessary to compliment Minister Lenihan on the quality of this appointment and to hope that Prof Honohan’s advice is swiftly acted upon.
@ colm mccarthy
You are absolutely correct;
“The government should see a full inquiry as the next necessary building block in the construction of public support for the period of austerity which has to be endured.”
Nothing less will do if we are to restore confidence in the banking system.
There are many waiting to tell their story and ultimate success in the effort to restore the health of our economy will be determined by giving them the freedom to do so and TO DO SO QUICKLY.
The terms of reference must be broad and all encompassing, to include the insurance and pension companies who may have been involved in the cross financing of deals with the bankers which subsequently caused the destruction of the wealth of their investors and customers.
VERY IMPORTANT: It is necessary to point out that in New York Mr. Madoff was first arrested exactly one year ago, on Dec. 11th 2008, and has since been investigated, charged, forfeited his ill-gotten gains and sentenced to 150 years in prison.
Appeal was denied and the severity of sentence was granted to prosecutor Irving Picard when he informed the Court that “Mr. Madoff has not provided meaningful cooperation or assistance.”
The Irish commission of enquiry now proposed will need to be backed up by a ‘Criminal Assets Bureau’ style until (with international expertise) which will vigorously investigate any and all evidence of fraud and criminal behaviour.
Should any individual being asked to give testimony attempt to mount a hugely expensive legal obstacle, then a way must be found to make such persons liable for ALL their own legal costs.
To allow such people to burden the Irish taxpayers further would be unjust in the extreme.
The scandal of the various tribunal legal costs must NEVER be repeated.
If people want to engage outrageously expensive legal teams then it must be made absolutely clear at the outset that the Irish taxpayers will most certainly not be liable for the bill.
I believe the question raised by the revered Chinese shade, Zhou Enlai, about the nature of the inquiries called for by both Colm McCarthy and now, Governor Honohan is very relevant. I’m not sure what these inquiries would achieve – unless they are the preliminary steps in a thorough-going process of reform. I would be happy to be corrected, but, in my view, Colm is focused on the risk of ungovernability and the impact that would have on the perception of external lenders. Governor Honohan appears focused on driving a change in culture in the banking and financial sectors that will allow him to do his job properly.
Given the extent of legal protection mechanisms available to those who would be subject to inquiry combined with an apparently widespread visceral public desire to see heads roll, I fear inquiries of this nature would generate more heat than light and fail to make progress on the reforms required to minimise a repetition of this crisis.
At the root, the source of this problem is in failures of the institutions and procedures of democratic governance. All the parties involved – whether commercial or regulatory – responded rationally to the policies implemented and the signals conveyed – either explicitly or implicitly – by successive governments. And these governments have been elected by a plurality of voters in free and fair elections.
By all means, inquire into what went wrong, but start with the source of the problem and follow through with meaningful reform of the process of democratic governance.
Citizen Honohan wants politicians, expert economists (which ones) and social scientists to be involved in getting to the bottom of the mess.
Surely, this is a recipe for never getting to the bottom of anything. This “remedy” called for would make sure that those responsible would never, ever answer for their actions. Politicians, social scientists, economists….? Why did he not throw in the need for a few jungian analysts just for good measure? This is just playing to the gallery. We need a Madoff style investigation and a Madoff style conclusion. In the US they not call in social scientists to explain fraud. Fraud is fraud!
From my post on this site yesterday:
“Subsequent High Court and Supreme Court judgements in the wake of the
successful DIRT inquiry carried out by the PAC impacted on the ability of Oireachtas committees to perform such non-legislative functions (MacCarthaigh, 2005). Barry and O’Dowd (2001) contrasted the speed and success of the DIRT inquiry – along with that of the UK Scott inquiry into the illegal export of arms to Iraq, Canadian and Australian Royal Commissions, and the US Grand Jury system – with the cumbersome procedures evident in Irish Tribunals of Inquiry.”
The issues I raised yesterday would need to be resolved if a DIRT-type inquiry were to be able to avoid getting bogged down in a legal quagmire. PH seems to recognised this in writing that “I expect that the Oireachtas will, in time, decide to authorise some form of inquiry to try to understand the deeper, underlying causes of this crisis so that wider lessons can be learnt for the future. In considering how best to do this, I suggest that new models need to be explored.”
Can I humbly offer to save a few bob on enquiries, inquiries, commissions and committees and to avoid the drudgery of the inevitable ineffectual non-conclusions that will be reached by suggesting that we might arrive at a set of very simple and already known explanations that may include, for example: the hoarding of land banks; the failure to compulsorily purchase same in the public interest (too radical and socialist you know and contravening the rights of the handful of uber hoarders); tax breaks; the consequent price of land; the requirement by the many to meet a basic need (somewhere to live) coupled with the non-availability of civilised rental accommodation or regulation (or rental culture granted); low interest rates; the basic laws of supply and demand to which the banks reacted as any business would whose aim is to maximise profit; regulation that was inadequate (noting that liquidity ratios were ok and systemic risk assessment said everything was ok based on the rules of the game as it was played) and so on.
Regulatory failure is one piece of a much more cryptic puzzle but seems, conveniently for others (e.g. D/Finance, professional economists in the banks and property game etc.), to be the focus of so much of the public ire and the ire of so many contributors here. Regulation of the legal profession, of the medical profession, of nursing homes, of the care of children and many areas of Irish life is equally inadequate and as evidenced by recent reports can have profound conseqtly , that so many seem so obsessed with was a function of the entire culture and the arrogance and complacency of governance that spills from the top down – apparently the ruling junta thought the show could go on forever as did many of those otherwise lauded as if they were achieved olympian feats whereas they during the – ever notice how as an alternative as well as deeply ingrained culturalneed to meet associated tax breaks and greed all shored up by a
Oops – hit the submit button in error. Apologies. Sure you get my gist anyway…
@Paul Hunt
The costs of the deliberately engineered bubble are gigantic. The establishment have decided to hit us with direct costs of €65Bn through NAMA. The indirect costs could be vastly more. Add on the additional costs of many years of mass unemployment, mass emigration, lost output, higher taxes and vast reputational damage to the country caused by their recklessness and the total cost must be enormous. Would a figure of €100Bn be a fair estimate of the final bill?
All we have gotten in the way of accountability has been some criticism in our major media of FF/Developers/Bankers that died out long ago. The only people the media have gotten really angry about for many months now have been public sector workers. http://www.independent.ie/opinion/analysis/george-garvey-we-cant-allow-semistate-sector-to-escape-pay-cuts-1975006.html
Why do we not see this sort of tone being used about FF/Bankers/Developers, the evil triangle? Why are we to take €100Bn of nonsense from them but only workers deserve quick punishment?
Are you saying then, Mr Hunt, that we should let the mass emigration, mass unemployment and massive cost of our establishment’s greed, recklessness and criminality go by without any justice being done? How much justice does €100,000,000,000 of illegality buy?
How many jailed TV licence non-payers does that equate to? http://www.irishexaminer.com/ireland/ideysnmhey/
At 1 week for each licence fee of €160 unpaid that equates to
4 BILLION, 375 MILLION days in prison deserved by the perpetrators.
So far they have had NONE and they probably never will have.
And you believe they have already suffered enough?
Is justice completed when a few critical articles have appeared in the newspapers? Would you make the same argument for Madoff? “Ah, the press coverage was enough of a punishment. A proud man like him, sure the loss of reputation alone is enough.” Sorry, all these people have necks like jockey’s unmentionables. They are laughing at our meek response. In a few years they’ll be back, like Larry Goodman was, still superwealthy and still in their homes on Ailesbury and Shrewsbury Road.
As a country, we should simply not allow ourselves to be treated like this.
In Ireland the only people who suffer are the victims.
@Eoin
I take the same position on Alan and Garret Bailout as Fine Gael Longford-Westmeath TD James Bannon does:
“Mr Dukes is in no position to make an impartial public statement on Nama,” Mr Bannon said. “He is a Government appointee to the board of Anglo Irish Bank which was bailed at a cost of €3 billion despite the misgivings of those who are footing the bill – the taxpayer.
“The timing for Mr Dukes’s support of this Fianna Fáil proposal is extraordinary given that it follows hot-foot on the pro-Nama remarks of another ex-party leader Garret FitzGerald, who also appears to be dancing to another tune.
“What price party loyalty, Alan? Why weren’t you more vocal on the big beasts of the Irish property sector who attacked the very foundation of this State for their own gain? Why did we not hear from you about the cronyism that is rife in Fianna Fáil and has brought this country to its knees?”
Mr Bannon concluded: “Mr Dukes should under no circumstances be given the option of renewing his role as vice-president of Fine Gael. He should, in fact, be shown the door sooner rather than later.”
Let’s hope those in FG who think like Mr. Bannon refuse to be bullied by the establishment figures in their party and insist that justice is done on the destroyers of the country.
@Paul Hunt
4 major financial institutions are insolvent: Anglo, Nationwide, AIB and BOI. This does not include Irish subsidiaries of foreign banks. In other countries there would be an investigation into whether the conduct of the directors was reckless. To fully nationalise the banks would be to concede that they were insolvent. Hence, I believe, the extreme reluctance of the government to do this and their repeated attempts to ensure that the NAMA valuers discount did not produce this. If it does produce this they want the margin of insolvency to be as small as possible. If the NAMA valuers show the banks to be grossly insolvent a host of awkward questions would ensue.
The story of our financial crisis has been of the dogs that didn’t bark.
Instead of all four insolvent institutions being investigated only Anglo is and that very slowly. Why? One year and three months after the inexplicable, reckless blanket bank guarantee the demand for an enquiry has to be lead by academic economists. Why? Shouldn’t the opposition, the media, the unions, ISME et al have been loudly demanding this for over a year?
This is a full scale establishment cover up. The establishment were allowed to cover up previous large-scale wrongdoing in the banks.
Ultimate result: Massive damage to our economy.
Changing our structures is good but the immediate need is for enforcement.
@ Robert Browne,
My understanding from listening to Elizabeth Warren and other commentators at that side of the Atlantic, is that Madoff’s work, large in scale though it was, was still only a small part of the bigger picture in the US problem. The problem in the US is really, really big in scale when you take everything into the picture besides individuals such as Madoff. It’s huge.
That is not to say that Madoff’s case didn’t deserve the attention it got. On the contrary. But the other thing that bothers me about Madoff, is the fact his scheme was so well buried in the middle of Wall Street, without the 2008 financial near-collapse, he probably have gotten away clean with it. I mean to say, it was in no part due to the diligence, skill or otherwise of US authorities that the matter finally came out.
That aspect to the Madoff case, should be a lot more un-settle-ing to us, than the crimes he got away with and crimes he was convicted of. The fact that other Madoff’s have probably happened in the past, are probably going on as we speak. That is the most un-settling thing about Madoff to me.
@ All,
I always come back to the issue of looking at the system. It is much more important that we learn to see and understand how our country operates in a systemic kind of way. Otherwise, if we don’t attain that skill we will continue to require blanket guarantees for every little problem we come across. Because we don’t know exactly which part of the system is crucial to functionality and what is not. We will never know, but we need a better understanding.
Nexus: Small Worlds and the Groundbreaking Theory of Networks by Mark Buchanan is a good reference for those of you new to this kind of subject area. He has a chapter in particular where he talks about natural ecosystems, and how one certain species in the system might be devastating if it removed or killed off. That is, it would have a dis-proportionate impact on the entire system, if it ceased to be. Of course, the problem for environmentalists is that they can never be sure which is that key ‘super-connector’ species. There may be several.
But the fact is, they cannot all be crucial to the system. The fact is, that in Ireland property developers, banks and institutions like Dublin Docklands Authority all believed they were crucial to the system. But by definition, they cannot all be. The point is, we haven’t begun to understand this properly. Obviously Lehman brothers had some dis-proportionate importance which Bernanke, Paulson, Geithner did not understand.
If you are to look at things from the ‘green’ perspective, it appears we are going to enter a period of turbulence in our history. Whether the cause be global trade, sea levels, population movement, species extinction, natural disasters or some dasterdly combination of all of those (most likely). In that context, it makes it even more important that economics explores the use of tools and science which enable us to visualise what is going on.
If my experience is design and architecture is anything to go by (thumbs up to the people at Zoe dev. who taught me such important lessons about ‘Lateral Thinking’) the human brain is by far the most powerful instrument in this particular kind of thought process. Finding the right connections and make associations that would never seem sensical to a machine. It just so happens that our brains, though running at less than a Megahertz I think Ray Kurzweil suggested, are massively parallel and ideally suited to such large and diverse problem solving. Edward De Bono was right, climate change is a huge challenge facing our species. But the challenge to learn how to think better is the most important challenge of all. The education system has to respond and react fast to this reality, IMHO.
The one quick thing I will say here about the ‘system’ or the ‘society’ in Ireland is as follows. I knew a fellow growing up, an accountant. His position when I was in my late teens was to wind up a very successful Irish company which did business on the global scale. At its height it had employed many, and was based in the mid-west of this country. But I guess it made some bad decisions and the employee roster was whittled down to a dozen or so accountants of which my friend was one.
I think the company was taken over my an Irish-American for buttons, and David McWilliams may have been stuck somewhere in the middle of it. But anyhow, the details are not that important.
Following that initial career, my accountant friend moved on to other posts. Some more permanent and stable, some less so. The strange thing is, I am now in my mid thirties and I know my accountant friend is busy closing down one of the huge Irish property development companies. Same story, a dozen employees left rattling around in the headquarters, probably waiting to sell what is left of the carcass to a friendly Irish-American dispora or something. Who knows.
I don’t know much about the original company that went bust years ago. It was an industry that I do not understand. Although I do understand the construction industry where he currently resides. But what struck me about this accountant or financial controller/director to be exact, is how similar his life seems to be. No matter what industry he goes into.
It is a bit like that quip about couples getting their photo taken in Hello magazine, or a startup business that was featured on Gaybo’s old ‘Late Late Show’. Shortly afterwards the couple had broken up and the business would be gone too. So the rule was, if you are a couple don’t be seen in Hello magazine. If you are a successful startup business, don’t go on the Late Late. If you are a company and you employ my accountant friend as a financial controller who know what to expect also.
This is the problem as I see it in Ireland. There is a kind of an elite financial class, who simply move around from pillar to post, assisting good Irish companies to throw themselves into an early grave. They are like the grim reaper and they get paid enormous salaries to do this kind of work. I just thought I would bring up this observation about the ‘Irish system’ for your interest.
Everyone always called economist and TV presenter George Lee, the grim reaper. But he isn’t the real one. We need to become more acquainted I think with the ‘real grim reapers’ we have in Irish society. No one has ever followed up their story properly or pursued it. We have heard almost every other contribution except that one. I don’t know enough about companies and capitalism to put all of this jigsaw together. But I do know this is a crucial piece of the story of the Irish society.
I knew there was something specific I discovered today. I wanted to draw it to the attention of Brian Lucey in particular. Caroline Madden had a very small piece tucked away in the Finance page today in IT.
In terms of a 9-11 style inquiry into the banking collapse in Ireland. The Caroline Madden piece is very short and sweet, but it gets across a point. It is a point that Brian Lucey has made on several occasions in the past I think, about the behaviour of Irish Banks. But the trick with a 9-11 style inquiry is to write it up in a short concise way, that gets the point across and produces an overall document that someone could read – a future historian for instance – who may live in a period of even worse turmoil than we now experience. This 9-11 style document could be important for posterity for future researchers to trace where things went wrong, how they went wrong. To provide a decent snapshot, no more and no less.
Caroline Madden’s piece is exemplary from that point of view. What it does is it explains the relative positions of Anglo Irish versus the two other main lenders in the Irish economy. If you look at BOI or AIB on their own, which we have been doing a lot in recent times, their behaviour looks terrible. But when you juxtapose BOI and AIB with Anglo as in Madden’s writing, you get a different picture.
One can almost begin to re-create the context in which CEO’s of AIB and BOI operated. They must have come under extreme pressure from shareholders to be more Anglo-like in their agressive-ness. Possibly at shareholder meetings, BOI and AIB management were accussed of being too tame and not earning enough on the shareholder’s behalf. Perhaps AIB and BOI felt they would lose capital if they didn’t display the right kind of aggressive, go-after-the-action psychology.
That was definitely the psychology that I began to experience in the building and development industry. Go-after-the-action. It is up to future generations to interpret the 9-11 style report how they so wish and augment the analysis perhaps. I suggest Caroline Madden’s piece in the IT as a kind of template for what could and should be recorded. Good factual information useful to future researchers or hobbyist historians for all I know. Most of the work and observations of economist Brian Lucey and others could be re-compiled into this ‘format’, so the information could be represented in one consistent style of document. (that in therory could be studied from cover to cover)
That is my best suggestion.
Paul Hunt
While I agree that what you say has a place what will stop it happening again? Do you reqally believe that the Minister was not aware of the problems with the banks? The smoking gun has not been publicised but it ior they undoubtedly exist.
Neary knows how the game is played and went along and was rewarded. He took one for the team!
Fraud may well have been involved but investigating it is a job for the Gardai!
The whole point of these Inquiries is to avoid a genuine investigation with teeth! There was no FBI, NYPD investigation into 9/11. The results were declared as the buildings were being pulled!
Send in the Gardai and allow them acces to all public records to investigate what corruption was involved. Set up a permanent body to do the job as with every other civilized jurisdiction! Or else do it the Irish way where the dogs in th street know, but nothing is ever done to stop a recurrence!
After all it is 100,000,000,000 Euro. Worth a few million Euro investigating this mess! Betcha find some EU papers on these banks too! We are not being told the full story, as George Bush Sr said ” If the people knew what we had done they would (lynch us)”
@E65Bn plus economic costs and NO extra lending!
I can see that you’re angry and I can understand why. But I don’t think you should treat me as part of the problem. Like many others who post on this blog, I am searching for, advancing and discussing possible solutions.
@ E65bn
the core issue as regards to Dukes and Dr Fitz is that they perhaps see a more complicated bigger picture than an individual TD might do. Nationalising the banking sector sounds great down in the local constituency office, but you have to ask why governments across the world always see it as the very last gasp option they are willing to undertake, only doing it when, literally, everything has failed. Is there a possibility that its easy for those in Opposition to suggest something, but far more difficult for those in power to actually do it due to so many other factors being at play? Im not just talking about the banks here. Witness the bizarrety of various Opposition responses to the budget in both the lead up to (“FF will do a cosy deal with the Unions!”) and the aftermath of (“FF screwed over the Unions!”). It’s always easier for a spectator on the side of the pitch to make the big calls, especially when they are often impossible to disprove.
As i said above, i think its a sad state of affairs when the opinions of the 4 previously highly respected people above that i mentioned (as well as others in our economy) are completely trashed in an over-simplified way on sites like this when people simply disagree over what is in reality an immensley complicated situation concerning our banks. I see even the incredibly fair and open-minded Paul Hunt was at the end of a dose from you as well, coming shortly after your equally frothy attacks on Ms Carey on another thread. Spot a pattern?
@ Eoin,
I always say, it starts at our own dinner table. Most families in the modern world cannot sit together at a dinner table and conduct a semi-sensible conversation for even 5 minutes. Yet our population has never been better educated and qualified in all kinds of subjects and theory. I think that scene in the American Beauty movie with Kevin Spacey throwing the dinner plate against the wall was quite appropriate to the times we live in.
@Eoin,
Thank you. Wrt to three of the gentlemen you mention (I have no grounds to comment on Alan Ahearne as his public uttterances have been curtailed since becoming ensnared in the Government machine) my opinion is that the views they have expressed (which have been widely interpreted as being supportive of Government policy – and subject to calumny as a result) are guided by a desire to foster some national solidarity since there is risk that public anger will boil over and the country will become ungovernable.
I view Colm McCarthy’s continuing calls for an inquiry into the banking/property bubble fiasco in a similar light.
I also recall that Dr. Fitzgerald’s perceived support of the current policy thrust is conditional on the Government taking necessary steps to begin to stabilise the public finances and to secure Ireland’s reputation in the international capital markets. After that the Dail should be dissolved.
Where I am, perhaps, a little disappointed is that they have not called for the major reforms that are required in the institutions and process of democratic governance – and which seem to be getting a little more attention on this blog. Their stature would contribute enormously to securing the necessary politcial and public engagement.
As a result, they are seen by many – rightly or wrongly – as part of the establishment that created this mess and which wishes to return to “business-as-usual” asap.
@Paul Hunt
Fully agree on calls ‘for the major reforms that are required in the institutions and process of democratic governance.’ Broader hats and better more appropriate models …… inclinations of the conservative dominant logics to to get back to ‘business-as-usual – asap’ which is a frighteningly dangerous option – it didn’t work and almost took us down! I’ll settle for 51 percent – and we need institutional leaders we can trust within the systems of democratic governance to mind that one per cent (-;
We need a proper criminal investigation of what happened. This idea of a 9/11 style investigation is horrible and not the way to go.
A lot of people now admit that the tribunals protected people for years and years from the rigors of the law. This is what would happen here and like the tribunals many of the main actors would be dead by the time it issued its findings, none of which, in any event, would be binding in an actual court of law. Let the academics write as many papers as they like, about what they think, happened. Meanwhile, the Garda fraud squad need to do their job unhindered by the academics.
@ Robert Browne,
thanks for the comment back Robert. Interesting view in terms of the investigation. There is a lot of good merit in what you say there.
51 replies on “Honohan Testimony to Oireachtas Committee”
This is the first time the Governor has called for an inquiry into the collapse of the Irish commercial banks, whose losses equal or exceed their entire equity capital.
Almost all the losses were incurred lending money to Irish customers, and the collapse would have been precipitated by some other event had Lehman been rescued. This is an Irish story.
The failure to date to provide the public with a detailed narrative, including the regulatory and supervisory failure, has fuelled public resistance to budgetary tightening, and may yet damage the collectability of debt. The (accurate) perception that the bankers have got off lightly provides the moral escape-hatch to strategic default.
The government should see a full inquiry as the next necessary building block in the construction of public support for the period of austerity which has to be endured.
In the past, major business fiascos in Ireland did not cause crises for Irish banks, partly because they used to have an idea what was going on and let foreign banks take the shaky business and suffer the consequences. Larry Goodman and Bray Travel are two cases that come to mind. Why was it so different this time?
Also, I think the distinction between bank equity investors who did not get off lightly and bankers who did needs to be made more often.
Finally, it could be very interesting to know more about characteristics of the current non-government shareholders. Has anyone done any analysis?
Does the CAB have sufficient powers to seize in case of fraud?
Public outrage is only going to be satisfied by real pain. Particularly when the repossessions start.
This is not about borrowers anymore in the public perception, it is about lenders.
The government do not want a full inquiry because it will show that they were one of the main causes of the crisis. With elections in the offing they can do without reports which would play into the hands of opposition parties.
When the repossessions become serious, they do not want to put useful documents into the hands of those that are having their properties re-possessed. Documents which would show definitively that the products they were sold were not regulated by the financial regulator as stated on the contract. Documents which would highlight the reckless trading of the financial institutions. The availability of these documents most likely would impact the decision of the court in favor of the mortgage holder and cause the banks to sustain even greater losses. Is this what the government would like to see happening?
These documents would also show that the government.
(a) helped to inflate property prices with all sorts of tax incentives
(b) failed with fiscal policies to halt the madcap lending policies and to reign in the tax incentivised building spree which had gripped the state, for fear of loosing tax revenues.
@Philip Lane
“For this reason, following discussions with Matthew Elderfield, the new head of financial supervision, who will be starting in a few weeks, we have decided to make a senior appointment to take charge of enforcement.”
First we thought Honohan was to be our Eliot Ness. Then it was to be Elderfield. Now it’s “senior appointment TBA”.
Standard Irish establishment practice – always appear to be on the verge of action while insulating yourself from responsibility to the maximum.
“As you know there have been high-profile allegations of wrongdoing in the context of the banking crisis. I do not wish to talk in any detail about these (indeed I cannot do so) [Patrick – try staying in your office and reading the old files!] beyond saying that, detailed investigations of these are in progress and the regulatory staff have contributed vigorously to this process.”
One year and three months after the bank guarantee (which almost destroyed the country) they’re still in the looking into phase. Why aren’t all banks in the country being investigated rather than just the high-profile ones?
Standard Irish establishment practice 2 – investigate as little as possible and as slowly as possible and defend your institution unreservedly.
“At the same time, since these loans are to be purchased by NAMA at “long-term economic values” (not far above current market prices)…”
Some would say that €7 Bn is very far. As for current market prices, the asking prices for new Dublin residential property, the elite parts of the banks property loans, are down 50%. That’s the discount NAMA’s valuer is applying to everything, from the floodplains of Munster to the 216,000 and growing empty properties. Clearly we will be massively overpaying: €65Bn plus economic cost and no extra lending according to Morgan Kelly’s work.
Standard Irish establishment practice 3 – defend the government right or wrong.
I welcome his call for an inquiry, following on from Colm McCarthy’s, but he seems to be prejudging its outcome:
“The crisis is not simply a question of discovering who did what and who knew what. Uncovering the deep roots of the crisis will require expertise and broad social scientific understanding more than merely forensic skills.”
There are no deep roots and no complexity, not even that provided by extensive subprime lending as in America. It is absolutely clear that a property/lending bubble was recklessly driven by an evil triangle of FF/PDs /bankers/developers. “who did what and who knew what”, is exactly what we need to know. The deeper truth that needs to be investigated is why people like Fitzgerald and Honohan ignore this and go looking for deeper roots. A sceptical person would say that the main reason is because it gets our establishment off the hook for any blame – Standard Irish establishment practice 4.
Honohan keeps laying the blame for the mass insolvency of our banks on Basel 2 and errors in regulatory philosophy. The thesis that it was all Basel is faulty. If he is not careful Basel Faulty is the moniker he will be remembered by.
There was some good stuff:
His comments on whistleblowers are encouraging.
His statements about carefully regulating the IFSC mean that there is now a slight chance that Irish registered institutions will not destroy global capitalism.
He has good ideas about increased bank lending.
But overall it was very disappointing.
@All
On reading Colm McCarthy’s comments I may have been overly harsh on Honohan. He has very good ideas about the future of Irish banking. The present of Irish banking seems to be safe in his hands too. The problem is the past. Why he took the job without getting cast iron assurances on the resolution of the past of Irish banking escapes me.
However, he has now rectified that. Effectively he has gone as far as he can do in his position to call for an inquiry. I congratulate him for doing so. Let’s all hope his call is front page news tomorrow.
@ E65Bn…
Be patient. This kind of public statement will always be somewhat dry as it’s necessary for someone in Honohan’s position to be very diplomatic.
I know it’s frustrating to be asked to be patient on this, but Honohan has a very good rep and has earned the right to a little more confidence imo.
@ David O’Donnell & E65Bn plus interest and NO extra lending!
Here is the body of an email I sent to Pat Kenny one year ago to the day. He did air it and was shot down by the anti-nationalisation argument.
I cannot reproduce the accompanying table in WordPress but the market values were as follows.
———————————————————————————————————
Name / Shares In Issue / Price / Market Value
Anglo Irish Banks / 759,952,175 / 0.377 / 286,501,970
Allied Irish Bank / 880,661,066 / 1.980 / 1,743,708,911
Bank Of Ireland / 1,004,193,740 / 0.880 / 883,690,491
Irish Life & Permanent / 276,782,351 / 1.520 / 420,709,174
Total stock market value one year ago = €3,334,610,545
“Pat
Brian Lenihan could buy the entire quoted Irish Banking System for €3.3Bn and still have €6.7 left over to fund credit for “real” business.
No dividend payments for five years.
Properly consolidate the sector (Swedish style).
And then sell the restructured entities at a later date (for 5? 6? 7? Billion)
Why bother with preference shares if you can own the whole lot?
The Country is already on the hook for €500Bn in any event. Providing €10Bn in Preference shares does the tax payer no good.”
———————————————————————————————————
So, in short the entire quoted banking system could have been taken over by the State for less than the “investment” in Anglo Irish Bank.
Every single shareholder could have received full market value (including Anglo).
Irish Life & Permanent would by now have been re-privatised at a gain of (what) €2bn?
Instead we have NAMA. We have already “invested” €11bn and not a shred of equity.
We will (under Fianna Fail and the Greens) “invest” another (what) €10bn?
That is €21bn of Citizen/Taxpayer money utterly squandered by Fianna Fail & the Greens.
Remember, we have already guaranteed the entire balance sheets of these institutions.
Why did we waste €11bn hard cash? Why another €10/€11/….€15Bn?
Why another €70bn into NAMA.
I am beginning to think this is government by the insane.
But as long as the Stag is not stressed God will look kindly upon us and grant us absolution from insanity.
@ E65Bn…
Oh, just saw our second post. Seems you don’t need my advice after all!
@ Antoin Daltún
“Also, I think the distinction between bank equity investors who did not get off lightly and bankers who did needs to be made more often.”
Antoin,
I think it would be even more useful if you (no offence) and others changed your use of words.
You have been led into a cul-de-sac of blaming “bankers”. People immediately think of overpaid executives.
They are not the bankers. The Bond Holders are the “Bankers”.
I would suggest that you change your mind when thinking of this crisis. Don’t allow your mind be infected by the “idea” of “bankers”.
Replace that word in your mind with BONDHOLDERS.
Thanks for linking to the document Philip. I hope to read through it tomorrow.
@Greg
Your point about bondholders is well made. When we remember that they were insured against losses their treatment is inexplicable.
Your other point about nationalisation is also irrefutable. We could have bought all these banks outright for €3 Bn and instead put in €7 Bn into AIB and BOI in ways that expressly prevented this? It defies belief. Now through NAMA we will lose another €65 Bn but we are still debating exactly what portion of ownership we will have in these insolvent institutions? Simply astounding.
@Marcus OC
I never doubted that Honohan’s intentions were good. I was more afraid that as an expert on bank crises he had simply said to himself,
“Politicians and bankers, what can you do. No point in new investigations, we know what happened so it will only destabilise things”. I believe this would be the wrong approach and I congratulate him for calling for an enquiry. As of 6.30 PM it only got one line in a minor story on The Irish Times site and I don’t see any mention of it yet on the Independent site.
“The governor also said he expects the Dáil to start an inquiry to understand the causes of the country’s financial crisis.”
http://www.irishtimes.com/newspaper/breaking/2009/1215/breaking77.htm
It is the first call for an enquiry that I am aware of by a senior public servant so I think it deserves the front page and a ringing editorial from The Irish Times.
I note that Prof. Honohan is calling for an enquiry which will yield a deeper understanding of why our banking failure came about. He suggests the enquiry needs to go beyond who knew what and who did what. This is the opposite of the interpretation I placed on Colm McCarthy’s call for an enquiry in the discussion about Colm McCarthy’s SBP article on unfinished business in the banking sector. I wonder are Patrick Honohan and Colm McCarthy talking about the same type of enquiry?
It’s unclear to me whether the inquiry called for is solely into how the banks ended up in the situation where they received the guarantee (a very important issue), or whether it is also into the details of how, and on what and whose advice, the granting of the guarantee was done (an equally important issue).
This is the second time in just 25 years that the banking sector has come pleading “too big to fail”; as with AIB and ICI the government appears to have swallowed that line (over a panicky weekend, both times), to the cost of taxpayers.*
*I do not believe the numbers produced to wish away the cost of ICI. No provision was made in them, as far as I know, for either the additional cost of servicing our national debt from the assumption (without even an equity stake) of AIB’s liabilities, nor the opportunity cost of the whole debacle.
@Philip Lane
Thanks for the early morning read – must say that wider hat appears to suit The Governor. Think we all need get into new models. This is a positive start.
@Aiman
The inquiry should include the bank guarantee. As Willem Buiter pointed out and as Lenihan himself conceded it almost brought down the country.
http://www.independent.ie/national-news/budget/news/eu-saved-country-from-total-collapse-1962416.html
“Support from the European Central Bank, after the banks were guaranteed in September of last year, helped save our bacon, he added.
“Were we not in the euro zone in the last year, our banking crisis could have resulted in a general collapse of the State,” Mr Lenihan said in Brussels.”
If that doesn’t deserve to be enquired into what does?
Meanwhile, if you are a semi-state worker I suggest you strike first before the government strikes you:
http://www.independent.ie/opinion/analysis/george-garvey-we-cant-allow-semistate-sector-to-escape-pay-cuts-1975006.html
Why do we not see this sort of tone being used about FF/bankers/Developers, the evil triangle?
I counted six uses of “”commercial” semi-states.” But the worst bit is here:
“At the first sign of any nonsense from semi-state managements or trade unions the finance minister should spell out the brutal facts of economic life to them. Any attempt to circumvent the minister’s demand for pay cuts through legal action or other means must be quickly punished.”
1 year and three months later we rarely hear our media loudly demanding punishment of any kind for our country’s destroyers. To them workers are much more deserving of quick punishment than the evil triangle.
@Philip Lane
Let me add my thanks to you for linking to the document. And there is good news – the call made the front page of The Irish Times website:
http://www.irishtimes.com/newspaper/frontpage/2009/1216/1224260764432.html
@ E65Bn plus economic costs and NO extra lending!
“Your other point about nationalisation is also irrefutable.”
Lovely word that. Irrefutable.
And it is precise.
I defy anyone commenting on this blog to refute that on this exact day last year there was any substantial argument not to nationalise the entire quoted value of bank licence holders with full compensation for the market value at that time.
There is no getting away from the FACT that Fianna Fail & the Greens could have taken €3.5bn of the public purse (a lesser amount than the Green Party agreed to waste on that stinking cadaver that is Anglo Irish) and had ownership of the entire of domestic banking franchise.
Irrefutable.
Correct.
It has occurred to me that Priests and Bishops owe allegiance to a Foreign State.
It is now occurring to me that Fianna Fail & the Greens also owe allegiance to a Foreign State.
@ E65Bn plus economic costs and NO extra lending!
“Your point about bondholders is well made. When we remember that they were insured against losses their treatment is inexplicable.”
Yes.
It is so commonplace in my mind (and yours) that all of this was AND IS insured that I sometimes forget it.
Ya see, the thing I’m just not getting here E65Bn plus economic costs and NO extra lending!, is this.
Why?
Why?
Why?
Why?
Derivative time bomb?
Prof Honohan made the point that the CB would be taking pay cuts (15% in the case of the new regulator, or €60k).
Is there any likelihood of the guaranteed institutions taking the same pay hits – the ordinary workers, not just the CEOs, as is the case in the public service?
@ Philip
I will get around to reading Citizen Honohan’s “opinion”.
But I must admit I cannot find any reason why there is a need for Citizen Honohan to offer an opinion.
We do not control the supply of money.
We do not control the rate of interest.
Do we need a Central Bank?
Do we need the opinion of Citizen Honohan?
@Aiman
You would have thought so wouldn’t you. Speaking of 15% that’s the risk-sharing Honohan told Lenihan to do:
http://www.rte.ie/business/2009/1215/central.html
No mention of The Call on the RTE website yet.
yoganmahew
The CAB does have power to seize the proceeds of crime even in the absence of a determination by a criminal court that there has been a crime. The presumption is against the person who has property seized. Taxes must also be paid on illegal proceeds, but only if the proceeds are retained. With penalties etc the usual tax haul is 100% of the proceeds found. And there are social welfare officers there too! And Customs, mainly for info purposes and liasing but they are expert rummagers. Not very attractive but all good blokes.
But it is under the complete control of good ol Fachtna! Who would never lie nor leak stuff to the Indo.
Never happen! Not at the political level. And expect a better class of lawyer to act for the “owners”!
The DIRT Inquiry was a whitewash as to how the banks were encouraged not to deduct DIRT etc. But it was an excellent Inquiry ……..
The 9/11 Commission is widely regarded as the same and I believe that many of the members of it realize that they were not fed anything like the truth…….
Do we want to find out? What would we do then? Surely we do want a whitewash that everyone can believe in. The UK has decided to rein in coroners inquests just as calls for the Dr Kelly case to go to the coroner. Do we need to waste money when we already know what happened but not who nor how much passed in secret accounts? What good would it do? The public would push for criminal sanctions and then where would we be. Keep a lid on it. Solidarity. Peace. Mine’s a treble Jameson
I suspect Citizen Honohan has met some internal difficulties……. This call is beyond his remit. This is usually issued when the desired results have already been arrived at. I doubt such a process has happened.
Is he kicking over the traces? Good for him but is he being effective? He is only a wet week in the job and yet he is looking to be the victim of a nasty hit and run. He does not say he has discovered that anything was wrong, ie he adds nothing to what all of us know already. So why him to speak out? He has no resources for such an Inquiry. Is he merely motivating a bankster or two to heel? It certainly is not aimed at the government that appointed him. If I were he I would have had someone a little higher in the foodchain issue the idea rather than declare it so, unless it had been cleared at the highest levels.
Has he got a good parachute?
Chow and Lie has a good point and even if an enquiry ever develops into an Inquiry, then it will have very precise terms.
Greg
Yes. I have been hinting as much for some time. Remember the Calvi affair? Masonry is at the heart of banking.
We do not ask those who swear truth or true service as public servants whther they have already sworn never to act against the interests of any class of persons. Why not?
We know the public service is riddled with Catholic and Judaeo/protestant Freemasonry. Do we care? What does an oath mean to a Godless society?
Antoin Daltún
I believe that some reckless young economists threatened their future careers by analysing European stockholdings and found that there were a very few very large holders of these “choses in action”. The found some differences between the US situation. They did not publish juicy details but were guarded.
We have to ask where did the Rockefeller divestments go? What of the fabled Rothschild wealth?
Having fewer governments makes it easier to deal with the right people for those “in business”! NWO here we come!
Alan Ahearne? Once respected and now villified on this site.
Alan Dukes? Once respected and now villified on this site.
Garrett Fitzgerald? Once respected and now villified on this site.
And now? Patrick Honohan? Once respected and the comments are now starting to turn towards villification on this site.
Its becoming a sad joke on here. Ever thought that some of these guys see a bigger picture which is not as a simple as total bank nationalisation? But yeah, you’re right, you guys know better…
@ Greg
in todays IT “he conceded that State ownership of one or both of the two biggest banks – Allied Irish Banks and Bank of Ireland – may rise to 50 per cent”.
Why only 50% is there a brick wall at 50%, is there a line in the sand an armageddon? We pump all this money in to get 49.99% Why?
@ Greg and E65
Nationalising the banks last year would not have meant a €3.3bn spend by the govt to get control of the banks, it would have gotten them for “free”. They were insolvent (still are) and shareholders would not have to be compensated. As we found out last week for Northern Rock (and will soon for Anglo), shareholders are entitled to nothing as the intrinsic value of the shares has been deemed worthless.
BRAVO! Prof Honohan.
Finally, a man of courage and integrity steps forward.
This is indeed the beginning of what will be a long hard fight to put our economy back on a sound footing.
It is now necessary to compliment Minister Lenihan on the quality of this appointment and to hope that Prof Honohan’s advice is swiftly acted upon.
@ colm mccarthy
You are absolutely correct;
“The government should see a full inquiry as the next necessary building block in the construction of public support for the period of austerity which has to be endured.”
Nothing less will do if we are to restore confidence in the banking system.
There are many waiting to tell their story and ultimate success in the effort to restore the health of our economy will be determined by giving them the freedom to do so and TO DO SO QUICKLY.
The terms of reference must be broad and all encompassing, to include the insurance and pension companies who may have been involved in the cross financing of deals with the bankers which subsequently caused the destruction of the wealth of their investors and customers.
VERY IMPORTANT: It is necessary to point out that in New York Mr. Madoff was first arrested exactly one year ago, on Dec. 11th 2008, and has since been investigated, charged, forfeited his ill-gotten gains and sentenced to 150 years in prison.
Appeal was denied and the severity of sentence was granted to prosecutor Irving Picard when he informed the Court that “Mr. Madoff has not provided meaningful cooperation or assistance.”
The Irish commission of enquiry now proposed will need to be backed up by a ‘Criminal Assets Bureau’ style until (with international expertise) which will vigorously investigate any and all evidence of fraud and criminal behaviour.
Should any individual being asked to give testimony attempt to mount a hugely expensive legal obstacle, then a way must be found to make such persons liable for ALL their own legal costs.
To allow such people to burden the Irish taxpayers further would be unjust in the extreme.
The scandal of the various tribunal legal costs must NEVER be repeated.
If people want to engage outrageously expensive legal teams then it must be made absolutely clear at the outset that the Irish taxpayers will most certainly not be liable for the bill.
I believe the question raised by the revered Chinese shade, Zhou Enlai, about the nature of the inquiries called for by both Colm McCarthy and now, Governor Honohan is very relevant. I’m not sure what these inquiries would achieve – unless they are the preliminary steps in a thorough-going process of reform. I would be happy to be corrected, but, in my view, Colm is focused on the risk of ungovernability and the impact that would have on the perception of external lenders. Governor Honohan appears focused on driving a change in culture in the banking and financial sectors that will allow him to do his job properly.
Given the extent of legal protection mechanisms available to those who would be subject to inquiry combined with an apparently widespread visceral public desire to see heads roll, I fear inquiries of this nature would generate more heat than light and fail to make progress on the reforms required to minimise a repetition of this crisis.
At the root, the source of this problem is in failures of the institutions and procedures of democratic governance. All the parties involved – whether commercial or regulatory – responded rationally to the policies implemented and the signals conveyed – either explicitly or implicitly – by successive governments. And these governments have been elected by a plurality of voters in free and fair elections.
By all means, inquire into what went wrong, but start with the source of the problem and follow through with meaningful reform of the process of democratic governance.
Citizen Honohan wants politicians, expert economists (which ones) and social scientists to be involved in getting to the bottom of the mess.
Surely, this is a recipe for never getting to the bottom of anything. This “remedy” called for would make sure that those responsible would never, ever answer for their actions. Politicians, social scientists, economists….? Why did he not throw in the need for a few jungian analysts just for good measure? This is just playing to the gallery. We need a Madoff style investigation and a Madoff style conclusion. In the US they not call in social scientists to explain fraud. Fraud is fraud!
From my post on this site yesterday:
“Subsequent High Court and Supreme Court judgements in the wake of the
successful DIRT inquiry carried out by the PAC impacted on the ability of Oireachtas committees to perform such non-legislative functions (MacCarthaigh, 2005). Barry and O’Dowd (2001) contrasted the speed and success of the DIRT inquiry – along with that of the UK Scott inquiry into the illegal export of arms to Iraq, Canadian and Australian Royal Commissions, and the US Grand Jury system – with the cumbersome procedures evident in Irish Tribunals of Inquiry.”
The issues I raised yesterday would need to be resolved if a DIRT-type inquiry were to be able to avoid getting bogged down in a legal quagmire. PH seems to recognised this in writing that “I expect that the Oireachtas will, in time, decide to authorise some form of inquiry to try to understand the deeper, underlying causes of this crisis so that wider lessons can be learnt for the future. In considering how best to do this, I suggest that new models need to be explored.”
Can I humbly offer to save a few bob on enquiries, inquiries, commissions and committees and to avoid the drudgery of the inevitable ineffectual non-conclusions that will be reached by suggesting that we might arrive at a set of very simple and already known explanations that may include, for example: the hoarding of land banks; the failure to compulsorily purchase same in the public interest (too radical and socialist you know and contravening the rights of the handful of uber hoarders); tax breaks; the consequent price of land; the requirement by the many to meet a basic need (somewhere to live) coupled with the non-availability of civilised rental accommodation or regulation (or rental culture granted); low interest rates; the basic laws of supply and demand to which the banks reacted as any business would whose aim is to maximise profit; regulation that was inadequate (noting that liquidity ratios were ok and systemic risk assessment said everything was ok based on the rules of the game as it was played) and so on.
Regulatory failure is one piece of a much more cryptic puzzle but seems, conveniently for others (e.g. D/Finance, professional economists in the banks and property game etc.), to be the focus of so much of the public ire and the ire of so many contributors here. Regulation of the legal profession, of the medical profession, of nursing homes, of the care of children and many areas of Irish life is equally inadequate and as evidenced by recent reports can have profound conseqtly , that so many seem so obsessed with was a function of the entire culture and the arrogance and complacency of governance that spills from the top down – apparently the ruling junta thought the show could go on forever as did many of those otherwise lauded as if they were achieved olympian feats whereas they during the – ever notice how as an alternative as well as deeply ingrained culturalneed to meet associated tax breaks and greed all shored up by a
Oops – hit the submit button in error. Apologies. Sure you get my gist anyway…
@Paul Hunt
The costs of the deliberately engineered bubble are gigantic. The establishment have decided to hit us with direct costs of €65Bn through NAMA. The indirect costs could be vastly more. Add on the additional costs of many years of mass unemployment, mass emigration, lost output, higher taxes and vast reputational damage to the country caused by their recklessness and the total cost must be enormous. Would a figure of €100Bn be a fair estimate of the final bill?
All we have gotten in the way of accountability has been some criticism in our major media of FF/Developers/Bankers that died out long ago. The only people the media have gotten really angry about for many months now have been public sector workers.
http://www.independent.ie/opinion/analysis/george-garvey-we-cant-allow-semistate-sector-to-escape-pay-cuts-1975006.html
Why do we not see this sort of tone being used about FF/Bankers/Developers, the evil triangle? Why are we to take €100Bn of nonsense from them but only workers deserve quick punishment?
Are you saying then, Mr Hunt, that we should let the mass emigration, mass unemployment and massive cost of our establishment’s greed, recklessness and criminality go by without any justice being done? How much justice does €100,000,000,000 of illegality buy?
How many jailed TV licence non-payers does that equate to?
http://www.irishexaminer.com/ireland/ideysnmhey/
At 1 week for each licence fee of €160 unpaid that equates to
4 BILLION, 375 MILLION days in prison deserved by the perpetrators.
So far they have had NONE and they probably never will have.
And you believe they have already suffered enough?
Is justice completed when a few critical articles have appeared in the newspapers? Would you make the same argument for Madoff? “Ah, the press coverage was enough of a punishment. A proud man like him, sure the loss of reputation alone is enough.” Sorry, all these people have necks like jockey’s unmentionables. They are laughing at our meek response. In a few years they’ll be back, like Larry Goodman was, still superwealthy and still in their homes on Ailesbury and Shrewsbury Road.
As a country, we should simply not allow ourselves to be treated like this.
In Ireland the only people who suffer are the victims.
@Eoin
I take the same position on Alan and Garret Bailout as Fine Gael Longford-Westmeath TD James Bannon does:
“Mr Dukes is in no position to make an impartial public statement on Nama,” Mr Bannon said. “He is a Government appointee to the board of Anglo Irish Bank which was bailed at a cost of €3 billion despite the misgivings of those who are footing the bill – the taxpayer.
“The timing for Mr Dukes’s support of this Fianna Fáil proposal is extraordinary given that it follows hot-foot on the pro-Nama remarks of another ex-party leader Garret FitzGerald, who also appears to be dancing to another tune.
“What price party loyalty, Alan? Why weren’t you more vocal on the big beasts of the Irish property sector who attacked the very foundation of this State for their own gain? Why did we not hear from you about the cronyism that is rife in Fianna Fáil and has brought this country to its knees?”
Mr Bannon concluded: “Mr Dukes should under no circumstances be given the option of renewing his role as vice-president of Fine Gael. He should, in fact, be shown the door sooner rather than later.”
http://www.irishtimes.com/newspaper/ireland/2009/0909/1224254134812.html
Let’s hope those in FG who think like Mr. Bannon refuse to be bullied by the establishment figures in their party and insist that justice is done on the destroyers of the country.
@Paul Hunt
4 major financial institutions are insolvent: Anglo, Nationwide, AIB and BOI. This does not include Irish subsidiaries of foreign banks. In other countries there would be an investigation into whether the conduct of the directors was reckless. To fully nationalise the banks would be to concede that they were insolvent. Hence, I believe, the extreme reluctance of the government to do this and their repeated attempts to ensure that the NAMA valuers discount did not produce this. If it does produce this they want the margin of insolvency to be as small as possible. If the NAMA valuers show the banks to be grossly insolvent a host of awkward questions would ensue.
The story of our financial crisis has been of the dogs that didn’t bark.
Instead of all four insolvent institutions being investigated only Anglo is and that very slowly. Why? One year and three months after the inexplicable, reckless blanket bank guarantee the demand for an enquiry has to be lead by academic economists. Why? Shouldn’t the opposition, the media, the unions, ISME et al have been loudly demanding this for over a year?
This is a full scale establishment cover up. The establishment were allowed to cover up previous large-scale wrongdoing in the banks.
Ultimate result: Massive damage to our economy.
Changing our structures is good but the immediate need is for enforcement.
@ Robert Browne,
My understanding from listening to Elizabeth Warren and other commentators at that side of the Atlantic, is that Madoff’s work, large in scale though it was, was still only a small part of the bigger picture in the US problem. The problem in the US is really, really big in scale when you take everything into the picture besides individuals such as Madoff. It’s huge.
That is not to say that Madoff’s case didn’t deserve the attention it got. On the contrary. But the other thing that bothers me about Madoff, is the fact his scheme was so well buried in the middle of Wall Street, without the 2008 financial near-collapse, he probably have gotten away clean with it. I mean to say, it was in no part due to the diligence, skill or otherwise of US authorities that the matter finally came out.
That aspect to the Madoff case, should be a lot more un-settle-ing to us, than the crimes he got away with and crimes he was convicted of. The fact that other Madoff’s have probably happened in the past, are probably going on as we speak. That is the most un-settling thing about Madoff to me.
@ All,
I always come back to the issue of looking at the system. It is much more important that we learn to see and understand how our country operates in a systemic kind of way. Otherwise, if we don’t attain that skill we will continue to require blanket guarantees for every little problem we come across. Because we don’t know exactly which part of the system is crucial to functionality and what is not. We will never know, but we need a better understanding.
Nexus: Small Worlds and the Groundbreaking Theory of Networks by Mark Buchanan is a good reference for those of you new to this kind of subject area. He has a chapter in particular where he talks about natural ecosystems, and how one certain species in the system might be devastating if it removed or killed off. That is, it would have a dis-proportionate impact on the entire system, if it ceased to be. Of course, the problem for environmentalists is that they can never be sure which is that key ‘super-connector’ species. There may be several.
But the fact is, they cannot all be crucial to the system. The fact is, that in Ireland property developers, banks and institutions like Dublin Docklands Authority all believed they were crucial to the system. But by definition, they cannot all be. The point is, we haven’t begun to understand this properly. Obviously Lehman brothers had some dis-proportionate importance which Bernanke, Paulson, Geithner did not understand.
If you are to look at things from the ‘green’ perspective, it appears we are going to enter a period of turbulence in our history. Whether the cause be global trade, sea levels, population movement, species extinction, natural disasters or some dasterdly combination of all of those (most likely). In that context, it makes it even more important that economics explores the use of tools and science which enable us to visualise what is going on.
If my experience is design and architecture is anything to go by (thumbs up to the people at Zoe dev. who taught me such important lessons about ‘Lateral Thinking’) the human brain is by far the most powerful instrument in this particular kind of thought process. Finding the right connections and make associations that would never seem sensical to a machine. It just so happens that our brains, though running at less than a Megahertz I think Ray Kurzweil suggested, are massively parallel and ideally suited to such large and diverse problem solving. Edward De Bono was right, climate change is a huge challenge facing our species. But the challenge to learn how to think better is the most important challenge of all. The education system has to respond and react fast to this reality, IMHO.
The one quick thing I will say here about the ‘system’ or the ‘society’ in Ireland is as follows. I knew a fellow growing up, an accountant. His position when I was in my late teens was to wind up a very successful Irish company which did business on the global scale. At its height it had employed many, and was based in the mid-west of this country. But I guess it made some bad decisions and the employee roster was whittled down to a dozen or so accountants of which my friend was one.
I think the company was taken over my an Irish-American for buttons, and David McWilliams may have been stuck somewhere in the middle of it. But anyhow, the details are not that important.
Following that initial career, my accountant friend moved on to other posts. Some more permanent and stable, some less so. The strange thing is, I am now in my mid thirties and I know my accountant friend is busy closing down one of the huge Irish property development companies. Same story, a dozen employees left rattling around in the headquarters, probably waiting to sell what is left of the carcass to a friendly Irish-American dispora or something. Who knows.
I don’t know much about the original company that went bust years ago. It was an industry that I do not understand. Although I do understand the construction industry where he currently resides. But what struck me about this accountant or financial controller/director to be exact, is how similar his life seems to be. No matter what industry he goes into.
It is a bit like that quip about couples getting their photo taken in Hello magazine, or a startup business that was featured on Gaybo’s old ‘Late Late Show’. Shortly afterwards the couple had broken up and the business would be gone too. So the rule was, if you are a couple don’t be seen in Hello magazine. If you are a successful startup business, don’t go on the Late Late. If you are a company and you employ my accountant friend as a financial controller who know what to expect also.
This is the problem as I see it in Ireland. There is a kind of an elite financial class, who simply move around from pillar to post, assisting good Irish companies to throw themselves into an early grave. They are like the grim reaper and they get paid enormous salaries to do this kind of work. I just thought I would bring up this observation about the ‘Irish system’ for your interest.
Everyone always called economist and TV presenter George Lee, the grim reaper. But he isn’t the real one. We need to become more acquainted I think with the ‘real grim reapers’ we have in Irish society. No one has ever followed up their story properly or pursued it. We have heard almost every other contribution except that one. I don’t know enough about companies and capitalism to put all of this jigsaw together. But I do know this is a crucial piece of the story of the Irish society.
I knew there was something specific I discovered today. I wanted to draw it to the attention of Brian Lucey in particular. Caroline Madden had a very small piece tucked away in the Finance page today in IT.
http://www.irishtimes.com/newspaper/finance/2009/1216/1224260756287.html
In terms of a 9-11 style inquiry into the banking collapse in Ireland. The Caroline Madden piece is very short and sweet, but it gets across a point. It is a point that Brian Lucey has made on several occasions in the past I think, about the behaviour of Irish Banks. But the trick with a 9-11 style inquiry is to write it up in a short concise way, that gets the point across and produces an overall document that someone could read – a future historian for instance – who may live in a period of even worse turmoil than we now experience. This 9-11 style document could be important for posterity for future researchers to trace where things went wrong, how they went wrong. To provide a decent snapshot, no more and no less.
Caroline Madden’s piece is exemplary from that point of view. What it does is it explains the relative positions of Anglo Irish versus the two other main lenders in the Irish economy. If you look at BOI or AIB on their own, which we have been doing a lot in recent times, their behaviour looks terrible. But when you juxtapose BOI and AIB with Anglo as in Madden’s writing, you get a different picture.
One can almost begin to re-create the context in which CEO’s of AIB and BOI operated. They must have come under extreme pressure from shareholders to be more Anglo-like in their agressive-ness. Possibly at shareholder meetings, BOI and AIB management were accussed of being too tame and not earning enough on the shareholder’s behalf. Perhaps AIB and BOI felt they would lose capital if they didn’t display the right kind of aggressive, go-after-the-action psychology.
That was definitely the psychology that I began to experience in the building and development industry. Go-after-the-action. It is up to future generations to interpret the 9-11 style report how they so wish and augment the analysis perhaps. I suggest Caroline Madden’s piece in the IT as a kind of template for what could and should be recorded. Good factual information useful to future researchers or hobbyist historians for all I know. Most of the work and observations of economist Brian Lucey and others could be re-compiled into this ‘format’, so the information could be represented in one consistent style of document. (that in therory could be studied from cover to cover)
That is my best suggestion.
Paul Hunt
While I agree that what you say has a place what will stop it happening again? Do you reqally believe that the Minister was not aware of the problems with the banks? The smoking gun has not been publicised but it ior they undoubtedly exist.
Neary knows how the game is played and went along and was rewarded. He took one for the team!
Fraud may well have been involved but investigating it is a job for the Gardai!
The whole point of these Inquiries is to avoid a genuine investigation with teeth! There was no FBI, NYPD investigation into 9/11. The results were declared as the buildings were being pulled!
Send in the Gardai and allow them acces to all public records to investigate what corruption was involved. Set up a permanent body to do the job as with every other civilized jurisdiction! Or else do it the Irish way where the dogs in th street know, but nothing is ever done to stop a recurrence!
After all it is 100,000,000,000 Euro. Worth a few million Euro investigating this mess! Betcha find some EU papers on these banks too! We are not being told the full story, as George Bush Sr said ” If the people knew what we had done they would (lynch us)”
@E65Bn plus economic costs and NO extra lending!
I can see that you’re angry and I can understand why. But I don’t think you should treat me as part of the problem. Like many others who post on this blog, I am searching for, advancing and discussing possible solutions.
@ E65bn
the core issue as regards to Dukes and Dr Fitz is that they perhaps see a more complicated bigger picture than an individual TD might do. Nationalising the banking sector sounds great down in the local constituency office, but you have to ask why governments across the world always see it as the very last gasp option they are willing to undertake, only doing it when, literally, everything has failed. Is there a possibility that its easy for those in Opposition to suggest something, but far more difficult for those in power to actually do it due to so many other factors being at play? Im not just talking about the banks here. Witness the bizarrety of various Opposition responses to the budget in both the lead up to (“FF will do a cosy deal with the Unions!”) and the aftermath of (“FF screwed over the Unions!”). It’s always easier for a spectator on the side of the pitch to make the big calls, especially when they are often impossible to disprove.
As i said above, i think its a sad state of affairs when the opinions of the 4 previously highly respected people above that i mentioned (as well as others in our economy) are completely trashed in an over-simplified way on sites like this when people simply disagree over what is in reality an immensley complicated situation concerning our banks. I see even the incredibly fair and open-minded Paul Hunt was at the end of a dose from you as well, coming shortly after your equally frothy attacks on Ms Carey on another thread. Spot a pattern?
@ Eoin,
I always say, it starts at our own dinner table. Most families in the modern world cannot sit together at a dinner table and conduct a semi-sensible conversation for even 5 minutes. Yet our population has never been better educated and qualified in all kinds of subjects and theory. I think that scene in the American Beauty movie with Kevin Spacey throwing the dinner plate against the wall was quite appropriate to the times we live in.
@Eoin,
Thank you. Wrt to three of the gentlemen you mention (I have no grounds to comment on Alan Ahearne as his public uttterances have been curtailed since becoming ensnared in the Government machine) my opinion is that the views they have expressed (which have been widely interpreted as being supportive of Government policy – and subject to calumny as a result) are guided by a desire to foster some national solidarity since there is risk that public anger will boil over and the country will become ungovernable.
I view Colm McCarthy’s continuing calls for an inquiry into the banking/property bubble fiasco in a similar light.
I also recall that Dr. Fitzgerald’s perceived support of the current policy thrust is conditional on the Government taking necessary steps to begin to stabilise the public finances and to secure Ireland’s reputation in the international capital markets. After that the Dail should be dissolved.
Where I am, perhaps, a little disappointed is that they have not called for the major reforms that are required in the institutions and process of democratic governance – and which seem to be getting a little more attention on this blog. Their stature would contribute enormously to securing the necessary politcial and public engagement.
As a result, they are seen by many – rightly or wrongly – as part of the establishment that created this mess and which wishes to return to “business-as-usual” asap.
@Paul Hunt
Fully agree on calls ‘for the major reforms that are required in the institutions and process of democratic governance.’ Broader hats and better more appropriate models …… inclinations of the conservative dominant logics to to get back to ‘business-as-usual – asap’ which is a frighteningly dangerous option – it didn’t work and almost took us down! I’ll settle for 51 percent – and we need institutional leaders we can trust within the systems of democratic governance to mind that one per cent (-;
We need a proper criminal investigation of what happened. This idea of a 9/11 style investigation is horrible and not the way to go.
A lot of people now admit that the tribunals protected people for years and years from the rigors of the law. This is what would happen here and like the tribunals many of the main actors would be dead by the time it issued its findings, none of which, in any event, would be binding in an actual court of law. Let the academics write as many papers as they like, about what they think, happened. Meanwhile, the Garda fraud squad need to do their job unhindered by the academics.
@ Robert Browne,
thanks for the comment back Robert. Interesting view in terms of the investigation. There is a lot of good merit in what you say there.