What Kind of Banking Inquiry, and Why?

Why have an inquiry?

1. The fiscal cost of the banking collapse is likely to be so substantial as to dwarf any similar event that has occurred since the foundation of the State. This is not e-voting machines, or the cost over-run on Luas, not that these were undeserving of investigation.

2. There has been a systemic collapse of the Irish banks – all of them. This is not a cock-up comparable to the DIRT/offshore accounts episode, or Mr. Rusnak, nor is it a failure of a rogue bank, or of small banks. 

3. The absence of a public explanation from the authorities or from the banks themselves has fed public perceptions that fiscal austerity is being pursued in order to bail out the banks. There would be fiscal austerity right now even if the banks were tickety-boo, but the absence of a factual public narrative on the banking collapse is damaging the credibility of the fiscal adjustment programme. Most economists regard this programme as necessary and desirable, at least in broad terms. It will take another three or four years, and it needs public acceptance.

4. Bank boards and bankers remain in situ with limited exceptions. The lack of contrition, given what has happened, fuels public anger and could damage the willingness to honour debts.

5. International capital markets have drawn their own conclusions about the extent of the fiscal cost, about the credibility of Irish regulatory authorities and about the probity of Irish business. The absence of a full narrative runs the risk of less favourable assessments than are actually warranted.  

Inquire into What?

6. Inquiries are under way, mainly concerning Anglo, into doctoring of accounts, loans to directors, share-support operations and other matters which may lead to criminal prosecutions. But several banks, including the two largest, appear to have lost most or all of their capital through mismanagement, without benefit of any criminal behaviour. An inquiry into boards and management is justified for the simple reason that these are banks, and have had to be rescued at taxpayer expense. The behaviour of auditors, and the efficacy of accounting standards, should also get a mention. A true and fair view would be that the Irish banks have made no profits at all for many years. 

7. There have also been major failures of regulation and supervision. How did a building society , for example, end up with a loan book 80% of which is headed for NAMA? Balance-sheet expansion, loan concentration and excessive exposure to funding risk on the liability side were permitted to proceed unchecked year after year.

8. Any inquiry should focus on these (non-criminal) issues – bank management, the performance of the regulatory authorities, auditors. The criminal investigations will take care of themselves.

9. Regulatory and supervisory functions are delegated to the Central Bank and its offshoots. The DoF and former Finance Ministers ought not to be in the firing line, on the principle that if you hire a dog, you don’t have to bark yourself. The media, and the Dail opposition parties, sometimes muddy the waters by seeking to pin the tail to the wrong donkey. So far as I am aware, the CB had adequate powers at all times, and never sought additional powers only to be refused.

How to Organise an Inquiry?

10. As a result of the Abbeylara episode, there may need to be special legislation to facilitate a parliamentary inquiry. There would be no public support for a ten-year extravaganza overseen by m’learned friends. Deputy Pat Rabbitte has apparently prepared a bill to deal with the Abbeylara fall-out, and Judge Yvonne Murphy appears to have done a competent job, quickly and at low cost, on the Dublin Archdiocese.

65 replies on “What Kind of Banking Inquiry, and Why?”

I agree with all the points you raise, particularly the last.

But it is a necessity that it be a quasi-judicial inquiry with powers to compel answers (using contempt rulings?). Otherwise we may have future enquiries into how much of the IFSC was turned into a mental reservation…

I would also add another couple of pre-requisites:
– generalised whistle-blower legislation – at least to the inquiry
– no protection of evidence from the fraud squad, the ODCE, the CAB etc. It’s a fiasco that anything said before the various tribunals was immune from use in a prosecution.

I’d like to move on to stocks, guillotine, sing-sing (we must, through NAMA, own some unpleasant high-security prison in the US somewhere?), but others will think it inappropriately vindictive. When they change their minds is time enough…

As George Lee put it tonight on the ‘Frontline’ hosted by Pat Kenny, Ireland has €300 billion of debt to pay, between bank asset work out, the national debt and personal mortgage exposure.

In 1999, the total was much less than €100 billion between all those things. (There was no NAMA ten years ago obviously)

I learned on tonights PrimeTime investigates program on TV, a basic fact that a Joe Soap like me would not have on the top of his head. Our ‘bank guarantee’ exposure of one year ago was €440 billion, or twice the country’s GDP.

Those are the kinds of basic ‘hooks’ that I need to hang my narrative of ‘what happened’ upon. I mean, a guy of very basic economic understanding and sophistication, but a guy who will obviously be part of the (hopefully) cooperative effort to work through €300 billion outstanding owed by this small country.

Now if I understood GDP I would probably know ‘everything’. Hold on, I have a ‘link’ for that somewhere.

I have to say, I do appreciate the Irish Times efforts in hiring economist Pat McArdle who has managed to explain a lot of ‘basic stuff’ in a non-condesending manner to folk like myself over the last few months. His article on GDP and GNP was another excellent tutorial.


It is rather like Karl Whelan remarked about Elizabeth Warren’s use of online video as a medium through which to explain things to the US citizen, again in a manner than does not be-little them. As I have mentioned in the past, everyone has their natural ‘medium’ through which they are able to best express themselves. I wouldn’t recommend that every economist with something to teach jumps to the online video as a medium, as it may not be suited to them. But Ms. Warren certain thrives in it.

I think that Pat McArdle’s very concise writing style is suited to an inquiry style of text formatting. I have mentioned before that Caroline Madden of the Irish Times also seems particular blessed with this ability to write in short, sharp pieces which contain much meaning and insight. This would be some of my own preferences for a guiding direction for a bank inquiry.

Short, sharp, read-able, concise pieces of text are extremely robust. They can be re-formatted effectively into sound, visions, interviews, analysis and expanded upon at will after that – especially by academic economists for the benefit of students, conferences, public etc. It would be nice to have a good investigative text.

This is a great article – why more of Bord Snip Nua’s recommendations were not included in the budget is beyond me.

However, any inquiry must not follow the same format as others have done recently. As Colm says, the Murphy report showed how it can be done.

You have very clearly set out the What and the Why?

As you point out, the How? seems to need clarification if done as parliamentary enquiry.

Is our tribunal legislation so written that we must have what you term a 10-year extravaganza?

Within existing tribunal legislation and court judgements, is there any possibility of a sharper investigating magistrate type of enquiry being as effective on the banking crisis as Judge Murphy’s has been on clerical sex abuse in the the Dublin Archdiocese?

If so, When? and Who?
If not, What next?

I find it bizarre that major regulatory changes are being made without even the benefit of something like the Turner Review, let alone an inquiry. Could we get Turner over here to do one for us?

In terms of how the inquiry is handled, a key issue is whether it is by way of public hearings — as in the DIRT inquiry — or by way of some investigating body or person which conducts its work and then reports.

There are attractions to the public route, of course, particularly for us in the sensationalist media. There would inevitably be political point scoring if it was by way of a Dail committee. But, provided the legal issues could be overcome, the DIRT inquiry shows that this system can work. This requires the appropriate expertise to be available and the necessary powers to call witnesses and get information, over which the Abbeylara decision has cast some doubt. Prof Honohan quoted the public 9/11 inquiry in the US, led by five republicans and five democrats backed up by an expert staff. It took about two years, I think.

I’m not sure about Colm’s point about Ministers and the Dept of Finance not being in the firing line. This depends on the scope of the inquiry. If it is to just look at regulatory issues and how the banks conducted themselves, then perhaps this is right. But can we ignore decisions such as the introduction and continual extension of property tax breaks, to take just one example?

There are, of course, a variety or investigative models which have been used in the past. No-one wants a ten year tribunal, though we might recall the excellent and expeditious job done by Judge McCracken ( one year to uncover the Ansbacher accounts and much more).

One further comment. The type of inquiry suggested could do much good work in terms of showing what happened and learning lessons. And we could then hope that the criminal investigations would also do their work. But could there be something lost in the middle?

One problem with the criminal prosecutions route is that it may only lead to a relatively small amount of information becoming public, even if charges do result. A lot more would become public if High Court Inspectors had been sent in to Anglo. I still fear that if this does not happen the combination of the now suggested inquiry and whatever criminal proceedings are taken may still leave much of the story untold, unless we find some way to give the inquiry very substantial powers.

If you look at that YouTube to Ms. Warren’s lecture it describes her as follows:

“Distinguished law scholar Elizabeth Warren teaches contract law, bankruptcy, and commercial law at Harvard Law School.”

What is it about that career summary which lends itself so well to Ms. Warren’s ability to see through all of the smoke and mirrors and get right down to the nuts and bolts of the matter?

I very important clue in this regard came to me, when Hernando de Soto came to Trinity college and spoke of his point of view on everything.


Later that same evening having listened to De Soto at Trinity, I was lucky enough to hear Tom Garvin describe the career of Sean Lemass. I was struck in Tom Garvin’s description of Lemass’s policies, how similar was the job that Lemass carried out in those early stages of the Irish state, to what De Soto is attempting to do in parts of the world today.

In one instance, Garvin spoke about Lemass identifying for the first time, that a shoe production factory might exist down in Co. Kerry somewhere, and another similar one existed in Co. Louth. But neither shoe factory really ‘knew’ about the other’s existence. (Remember there was no Internet google search or modern rapid transport system in those days – you would say we were a very low carbon society indeed)

Lemass was one of the first to capture strange information like that about Ireland’s industry. The main thing is that Ireland was beginning to understand itself. To account for it’s own enterprise, and better, figure out how to best use information captured in a strategic way.

From my basic understanding of Elizabeth Warren and Hernando de Soto, with their strongly legal perspective on property, contracts, ownership etc they realise this clear information system is what modern economic wealth is built upon.

Jim Barry of National Toil Roads is another person I will give a plug for, because in a similar fashion, Barry looks at the economy of Ireland in 2009 in a similar fashion to how Lemass did years ago. I.e. What resources we do have available and suggest ways to organise them to our best (competitive) advantage(s).

@ Mark Dowling,

In Shane Ross’s book ‘The Bankers’ he notes how the Irish banks got nervous about:

“private equity groups, which were hovering over the carcasses of the Irish banks.”

If those boys got their hands on the wares, all boards etc would have been filleted.

That is another scenario that could have played out as another alternative to the national-isation one.

@ Cliff Taylor,

Your point is very well made I think.

I attended a lecture in 2002 at my university about resource management for sustainable development. It dealt with the micro- level where individual clients would operate.

Last summer, in 2009 I attended another lecture which was excellent and did exactly the same thing except at the global macro-, scary level where whole populations cross borders etc in search of clean drinking water.

Last week, I was lucky enough to attend a lecture about the energy resource mapping project done for County Clare in Ireland. Which has to do with long term sustainable plans for development in the County.

It is funny you should mention ‘the middle-ground’.

I had imagined I knew the A-Z on resource mapping, from the micro- to the macro- scale. But the lecture I attended last week, made it very obvious to me I had completely missed, was totally un-awares of that vast middle-ground where so much can happen. (Or get lost, as you rightly suggested)

@ Colm

Would it be more effective to sub out this investigation under the auspices of an ECB audit commission, or whatever?
From the looks of things they are on their way to Greece anyhow.

Previous attempts at truth for the public good ended up benefiting private interests:
-law lords
-politicans and the virility of their public image
-never ending story for the media.

It would be a great thing if ‘we sorted it all out’ considering we caused it,
but if it ends up being a parody of cost effectiveness then surely this would be another reflection of our ‘national problem’?


We need a criminal investigation by the Gardai and the serious fraud squad and CAB into what happened. If RTE Prime Time reporters can lift the lid and reveal such a foul stench then let the Gardai get on with it. What we do not want is some academics, politicians and social scientists having a big powwow in the dail pouring over material which will eventually become the thesis for endless talks, conferences, papers and seminars on “the lack of financial regulation during the Celtic Tiger”.

Let Honohan and the new regulator get on with their jobs as best they can. Many of us know now what we knew all along, that the politicians had only to ring in for their multi million Euro loans and the cheque was being written even before the false paperwork was put on file.

Every day and night that goes by the smell gets inexorably worse.

There is no unity in this country, nor can there be to finance the mess that these people have created. National bankruptcy. Nor will there be any goodwill until they get their just desserts which must involve asset seizure, forfeiture of pensions, lump sums paid as bonuses. Together with sacking from positions of responsibility within the financial industry where these guys should never again work. The banking sector has to be cleaned up or else things will continue to spiral out of control.

Let the Garda and the judicary sort this out if the Garda need forensic accountants then let them have them, we need to get to the bottom of this quickly before those responsible flee the jurisdiction and make it much more difficult to get prosecutions. Oh, and by the way, this time let the word “expeditious” mean expeditious! If we can have LISBON, NAMA AND a BUDGET in 90 days why can’t we spend the next 90 days getting to grips with the fraud in the banks?

Courage and skill needed for any bank inquiry–PJ O’Meara


“However, there are a number of factors relating to parliamentary inquiries other than cost which must also be considered.

This form of investigation ran into difficulties during an investigation by the Joint Oireachtas Sub-Committee on Justice, Equality, Defence and Women’s Rights into the death of John Carty at Abbeylara, Co Longford.

In April 2002, the Supreme Court ruled that this sub-committee lacked the powers to make findings that would hold non-office holders or ordinary individuals responsible for the acts or behaviour under investigation.

This reverse was followed by the collapse of a parallel inquiry by the Joint Committee on Public Enterprise and Transport into the mini-CTC signalling project due to delays arising from an interim injunction, the uncertainty caused by the Supreme Court Abbeylara decision, and the beginning of the 2002 general election campaign.

While no attempt was made to hold another Dirt-style inquiry during the lifetime of the 29th Dáil, a Law Reform Commission report on public inquiries in March 2003 held that it was probable that the Abbeylara judgment would not have affected the capacity of the Oireachtas to conduct the Dirt inquiry or the CIÉ signalling costs overrun inquiry.

Consequently, it is clear that the terms of reference of any serious banking inquiry will have to be very carefully framed. Its procedures will also have to be rigorously examined and structured.

If the PAC does seek powers from the Oireachtas to compel witnesses to co-operate with its investigation in this instance it is unlikely to meet with the same level of co-operation as it did during the Dirt inquiry.

Back then the institutions whose conduct was under investigation appeared to have taken the view that they were culpable and it was in their interest to co-operate.

Last September’s State guarantee should ensure the compliance of our financial institutions. However, compelling individuals who are no longer employed in this sector or who may be co-operating with other investigations to attend its hearings may be problematic.

If they feel it would not be in their personal interests to co-operate with such a process the Abbeylara decision might encourage them to seek judicial review of the Oireachtas’s compellability powers.

If the inquiry passes these legal tests this cross-party body will still have to handle explosive political material. The collapse of the banking sector will be a key political battleground in the next general election.

How would the PAC manage the questioning of witnesses such as the Taoiseach and his predecessor in office by their political adversaries without damaging its internal cohesion? How would it adequately address the performance of those at senior Cabinet level in the inquiry report?

These will be largely uncharted waters for the inquiry team given that the standing orders of the PAC prevent it from inquiring into the merits of policy decisions. In addition, ministers never appear before the PAC at ordinary hearings – departments are represented by their secretaries general.

The Dirt inquiry got around this problem by delegating the questioning of previous ministers to its legal advisors. The collapse of the banking sector is a far more toxic subject matter. The country does not need a repeat of the squabbling that marked a 1994 Oireachtas inquiry into the collapse of the Fianna Fáil/Labour coalition government. The sub-committee could avoid this problem by excluding the role of the ministers for finance from their remit but would this then be a case of Hamlet without the prince?

Parliamentary inquiries are subject to particular time pressures as they expire automatically on the dissolution of the Oireachtas. It is generally accepted that it would not be possible for a PAC sub-committee to reconvene in the aftermath of a general election because the inquiry would have to maintain the same membership throughout and this might not be possible after a general election.

We live in times of great political instability. Many would not be surprised if the current Government collapsed before Christmas. Parliamentary inquiries are very demanding of the sub-committee members. Will they be able to prepare properly for public hearings or contribute to the drafting of a report in the current political environment?

None of these challenges should be underestimated. Nevertheless, the Dirt inquiry showed what a parliamentary inquiry can achieve if a committed sub-committee with sufficient talent and experience is given the support of personal, legal and financial advisers, in addition to the assistance of the Oireachtas Committee Secretariat.

McCarthy’s proposal for a parliamentary inquiry into the banking crisis is feasible and has merit. Parliamentary inquiries can work quickly and for a fraction of the cost of other forms of public inquiry. This banking inquiry will take no small amount of political skill, courage and energy.

It may cause sleepless nights for some but a Dirt-type inquiry will help us understand how we have reached this point in our history, and how we can safeguard against similar catastrophe in the future. This inquiry could even restore some of our lost faith in politics.

Colm McCarthy

Please do not spread the idea that the DIRT collusion was a cock up. That is inaccurate! (Tony) D A McCarthy was refused promotion for refusing a direct order from the Revenue Commissioners to shut down the AIB investigation. He eventually acquiesced, but at the DIRT enquiry, he said “the file remained on the floor”!
He was subsequently, two months later, promoted! The AIB said all along that they had the agreement of the Revenue Commissioners! They were telling the truth. I was working under Tony at the time in IB and he confided in me and in others.

Robert Browne

I agree. The Gardai should retake their place as investigators of corruption instead of Inquiries designed to whitewash! The Gardai have forensic accountants, in both GBFI and CAB.

Other countries hav special commissions targetting corruption at all levels. But we do not need that in Ireland!

I imagine that the whole thing was a state aid to grow the banking sector as was the SSIA scheme thereafter. What a good idea that was!

Just a ?
Will the PAC committee, or whoever, be given ‘time off’ to take on this great commitment and workload?
Will they walk away from their constitutuencies for the time that it takes to complete it?
Will the investigation break for Xmas, Paddies day, easter, summer etc in line with the dail to allow the TD’s to return to their busy local constituency work?

3 ? actually
Good night

The political backdrop is an intrinsic part of the banking crisis.

Political leaders were egging on the property boom; publicly associating with the leading developers; facilitating the planned sale of Irish Nationwide and as foreign shareholders owned the majority of shares in the banks, giving them no reason to fear restraint.

Beyond the tax breaks and cuts of the first five years, there wasn’t even a squeak when the 100% mortgage was introduced nor when the biggest bank began selling off its headquarters – – part of it to an already overstretched developer.

Crony boards and the absence of strong independent directors has been the standard as illustrated by the DCC/Fyffes case – – 2 ex-bank chiefs on the DCC board and it only acted eventually when big shareholders called time.

What would an inquiry tell us?

1. The best way to shine light on auditing is via a civil case against Ernst & Young, the auditors of Anglo Irish. Massaging year-end figures is as old as the joint stock company and it seems bizarre that big end-year value transactions over 8 years would have been missed.

The biggest of all was the €4.5bn loan from IL&P at the end of the 07/08 year on the first day of the State banking guarantee. Was it a loan or a deposit?

In a company where one powerful individual has final say, pressing such an issue would surely have risked losing a big account.

2. Unless an inquiry has access to auditing files and some key risk management files, it would have to rely on individual post hoc rationalisations/excuses.

The reason why the Murphy report on child abuse has potency, is that it had access to the files.

3. Issues such as insisting that an external director should be part of a risk management committee for approvals over a certain value and other aspects of governance don’t have to wait for an inquiry.

@ Colm McCarthy

We do need ‘swifter, deeper new models’ of independent inquiry. We have faced a potential systemic melt-down – – one would think that any following inquiry should be systemic and broad – this is essentially a threat to the present status quo – resistance {if futile as we’re ontcha!} is to be expected – but far more important than the understanding and learning to be gained from such a ‘reasonably swift inquiry’ is the other question – just what type of society and economy do we want here anyway? After last week’s budget we know whose bread is buttered this week.

Knowing where to begin is difficult in these sorts of situations.
The right balance between retribution and reconciliation is always hard to find in the aftermath of national trauma.
But it’s time for Ireland to move forward and this will only be possible by first examining what happened.

Joe Stiglitz gave a very interesting talk at the United Nations, 24 February 2009 – in which he examines the current financial crisis and analyses its impact on future global development. This serves to illustrate where we are starting from.

“We have to begin rethinking the Institutions”

@ Colm McCarthy
What he says in the outline is absolutely correct;

“The absence of a public explanation from the authorities or from the banks themselves has fed public perceptions that fiscal austerity is being pursued in order to bail out the banks.
Bank boards and bankers remain in situ with limited exceptions. The lack of contrition, given what has happened, fuels public anger and could damage the willingness to honour debts.”

It is vitally important that these issues are dealt with in a satisfactory way. Already I know of many people who are considering operating in the ‘black economy’ because they now believe a two tier system is in existence, one for the little guy who is taxed to the hilt and another for crooked bankers who walk away with millions and gold-plated pensions after having destroyed their companies.
An open, above board explanation of what happened is the only way to counter this growing and very damaging mindset.

This latest Irish Times poll illustrates public feeling about the bankers, a 3 to 1 majority say they need to be investigated:

After the raid on Anglo H.Q. on 23rd February Justice Minister Dermot Ahern signalled that the government would pursue banking chiefs involved in any wrongdoing following the raid. “Legislation is in place to bring to justice those who may have played hard and fast with the financial security of this country,” he said.

@ Michael Hennigan
This is an excellent suggestion:
“The best way to shine light on auditing is via a civil case against Ernst & Young, the auditors of Anglo Irish. Massaging year-end figures is as old as the joint stock company and it seems bizarre that big end-year value transactions over 8 years would have been missed.”

There are a number of other prosecutions which can also go ahead immediately:
The illegal share support scheme at Anglo Irish, for example; http://www.irishtimes.com/newspaper/opinion/2009/0221/1224241589939.html
There is no need to wait for the results of any inquiry to prosecute these cases.

These initial court actions will clearly illustrate if there is any attempt at political obstruction and if so, where exactly it is coming from.
These prosecutions will also have the immediate effect of illustrating to the people that justice is finally being done.
Another spin-off benefit from immediate prosecutions is that once there have been some initial convictions, this will have the effect of bringing forward some ‘whistle blowers.’ At the moment nobody is saying anything, but with a few initial convictions for some previous ‘untouchables’ all that would quickly change.
We must also allow for the fact that some of these prosecutions will fail, but from those failures will come the knowledge which will guarantee future success.

@ Michael Hennigan
“Unless an inquiry has access to auditing files and some key risk management files, it would have to rely on individual post hoc rationalisations/excuses.
The reason why the Murphy report on child abuse has potency, is that it had access to the files.”
This is a very valid point.


Here is an interesting proposal from; Eliot Spitzer a former Attorney General and Governor of New York.
Frank Partnoy a professor of law at the University of San Diego.
William Black a professor of economics and law at the University of Missouri-Kansas City.
Three people who have investigated a fair amount of financial fraud, where they call for an ‘open source’ investigation of what went wrong at AIG.

The proposal clearly illustrates what new skills are required in tracking down modern day corporate fraud.
Outside assistance (in training) is going to be required, from an agency like the FBI, if we are serious about getting to the bottom of what actually happened in the Irish financial community which led to the collapse of the banks.
If we fail to do so this situation will most certainly happen again.

I presume everybody readings these posts is well aware that even if you delete material in the digital domain footprints remain which are very clear to well trained ‘nerds’ and specialised software exists which can recover EVERYTHING and even identify who did the deleting.
Just thought I’d add that in for all those smart-boys who might be thinking it’s time to hit the DELETE button.

Finally, another take on the current crisis which you may find illuminating:

Yale Economists Discuss the National Financial Crisis

@Robert Browne – “If we can have LISBON, NAMA AND a BUDGET in 90 days why can’t we spend the next 90 days getting to grips with the fraud in the banks?”

I agree with you – police forces all over the world usually take this sort of thing on so why aren’t ours? Sadly, I think you need something called ‘political will’ to make that happen – and it ain’t going to happen. As much as you and I would like it to.

Some people we shouldn’t forget in all the shouting about the bankers and the politicians and the financial regulator…………. er, where were the auditors during this period?

@elaine byrne : courage needed eh….Sir Humphrey would, if he were to text, text “roflmao” at the idea….

The Morris tribunal, set up under the Tribunals of Inquiry Act 1921, took about 680 days to hear all the evidence, over a period of five years.and Morris was speedy compared to Moriarty or Mahon. The Dean Lyons inquiry on the other hand, was set up under the Commissions of Inquiry Act 2004, and took less than a year to complete its work.

I’ve seen Oireachtas committees at work. They can come to resemble political witchhunts all too easily. If we do want an inquiry, by all means have one that doesn’t take years, but we should also have one that works. The machinery is there.

Great post as ever. One quibble – point 9 – that assumes that the dog is in fact able to bark, and has not been trained to not bark. Its not clear that the dividing lines in theory between the role and function of DoF and CBFSRAI are anything like as strong in fact. All relevant organs of the state (including DoF and DoTaoiseach where a lot of IFSC material gets dealt with) need to be in any scope.


A compelling case for an inquiry has been made by you and by Patrick Honohan. The only argument is about what form such an inquiry should take, its timing and scope. And the politics, of course!

The Chilcot Inquiry into the Iraq War offers a model. The inquiry is being conducted by five Privy Counsellors led by Sir John Chilcot. There are no politicians on it.

We don’t have the equivalent of a Privy Council here for obvious reasons. The Council of State would seem to be the nearest thing to one, but given its composiiton and role would be of no particular value for this kind of inquiry. We do, however, have any number of eminent persons with appropriate expertise – retired members of the Judiciary, academics with an economics or public policy background, former senior political figures, public servants with experience of international banking systems and practices – who are independent of the political system and who could be appointed to conduct such an inquiry under the chairmanship of a nationally respected figure of stature.

The Chilcot Inquiry was established last July and is expected to report by the end of 2010. It is examining witnesses both in public and in private, including the former Prime Minister, Tony Blair. It has a website with podcasts, evidence transcripts, business schedules etc. and it is also being widely reported in the mainstream media. It’s trusted – so far anyway – because it is independent of the political process while not divorced from it.

A PAC based or other inquiry comprised of current parliamentarians could not do the job that is required in our case. I’m probably alone in this but I think the PAC DIRT inquiry provided a great, if temporary, boost to the careers of the politicians directly involved and was even better for the media, but was otherwise of little practical value. Certainly it failed the ‘won’t happen again’ test. Tribunals of Inquiry are totally discredited as a mechanism for inquiring into anything anymore.

What is suggested above may stand a better chance of commanding public confidence; of being fair and being seen to be fair to all comers. Moreover, it could also examine the shortcomings in political decisions that led up to the collapse of our banking system, though this would obviously be problematic for some serving members of the Oireacthas.

Finally, while I appreciate your underlying concern that the public can hardly be asked to go along with a programme of austerity whilst the questions about the banking system remain unanswered I think this is a secondary consideration. Arguably, the effect of an inquiry might be the opposite – that people may be even less inclined to accept austerity measures because of what is revealed as it goes about its business. There will also be some very difficult decisions about the banks faced by the government from early next year. It would hardly be desirable if public outrage, fuelled by selective reporting of the proceedings of any inquiry, impeded necessary decisions.

“Finally, while I appreciate your underlying concern that the public can hardly be asked to go along with a programme of austerity whilst the questions about the banking system remain unanswered I think this is a secondary consideration. Arguably, the effect of an inquiry might be the opposite – that people may be even less inclined to accept austerity measures because of what is revealed as it goes about its business.”
That’s a good point. But it only has relevance if the inquity has no outcomes – if there is no ‘justice’ (actually, at this stage, what many people want is ‘revenge’).

When you feel you have been sold down the river and you suspect that it was corruption that sold you, but the same voices that are calling for cuts in social welfare, national austerity, no bailouts for ordinary people are calling for a inquiry that will have no consequences (a series of enquiries, if you like), you run the risk that whatever is put in place will end up with the reputation of the tribunals – more pork for the piggies.


Your case appears to be based on a fear that, without a banking inquiry, public support for the stringent fiscal stabilisation programme required will evaporate, public anger may convert into an unwillingness to service an increasing soveriegn debt and that Ireland’s international reputation will be damaged more seriously than it deserves to be.

However, your case is really predicated on an implicit assumption that the current Government will complete its term in office until May 2012. Therefore, your call for an inquiry is, in effect, a substitute for the judgement that the people would pass if a general election were to be held in the near future.

Ireland is a seriously dysfunctional polity, but, fortunately, ultimate power and sovereignty is vested in the people. The problem is, that while the Government is able to maintain a majority in the Dail, the people have no ability to exercise their power and authority.

And I disagree with your contention that “the DoF and former Finance Ministers ought not to be in the firing line”. This, fundamentally, is a problem of politics and policy – of economic illiteracy and a desire for the exercise of unchecked power. I would contend that all the private and commercial players in this fiasco behaved perfectly rationally in economic terms in the context of the policy environment and the signals conveyed – both explicitly and implictly – by successive governments. And the regulators were captured – not by those they were empowered to regulate but – as instruments of government policy.

In a comment on this thread –
http://www.irisheconomy.ie/index.php/2009/12/18/energy-prices-in-ireland/#comments – I demonstrate how the energy regulator has been captured in this manner.

I believe that, rather than a call for an inquiry, this message should be conveyed to the Government: “You, and your predecessors, have created this mess which has massively magnified the economic damage from a major external shock. You have done a certain amount to shore up and stabilise the situation. Now go.”

@ Colm
A forensic post. Just one quibble.
The extensive powers of appointment, to be consulted, to require and receive reports, and to make regulations which are held by the Minister under the Central Banks Act 1942, as amended in 2003, in respect of both the Bank and Financial Regulator, would generally be thought to create both the power and the duty to monitor closely how the regime works and to intervene if it is not effective. This is normal within parliamentary democracies – ministers cannot readily give power away completely. This supports the arguments of Paul Hunt and Brian Lucey to the effect that the role of the Minister for Finance and his Department is an appropriate subject for investigation in any inquiry, whatever form it may take.

Very good post – thank you. I take a different view, namely a high profile tribunal of enquiry would be enormous waste of my tax payers money and would be the continued target of media sensationalism and of political co-mingling for years to come. Given the complexity of the banking system and its embedded links to welfare of the international markets – after many years of this ‘tribunal’ reporting the best you could expect is recommendations of all the things we know today. There must be a better way.

The real issue is that there were very serious incidents of illegal or at least sharp practices at some (or maybe all) of our financial institutions (albeit with a chorus of public support and blind eye behaviour in the polical world) and any malpractice demands criminal investigation absent of any political interference – this is essential!


I coudn’t agree more. I am afraid our past dealings with enquiries where the subject matter has been far less ‘complex’ is very poor. This destroys any prospect that such an enquiry would be value for money in any way. This would be another money-spinner for lawyers and the public in the end will gain very little.

We need to beef-up our enforcement of financial regulation that is clear and that is where we should dedicate resources and change laws to support this if necessary.

@ Veronica

“Arguably, the effect of an inquiry might be the opposite – that people may be even less inclined to accept austerity measures”.

People are already constructing the black economy even as we speak. They already have all the proof and motivation they need not to accept austerity measures. We have seen the cover up in the church and the slow drip, drip of resignations is this what you want?

In clamouring for Inquiries we sometimes forget about the rights of the individuals (or villains as the salivating masses might see them) involved.

When people are put at risk of losing their good name, their capacity for future earnings and possibly civil liability then the constitution allows them to defend themselves against being unfairly accused or stitched up. That is a human right under our system that people in less democratic countries do not enjoy.

It is correct because Irish bureaucrats, law enforcers and regulators have a flair for spurious accusations and attributing the status of “fact” to rumours and prejudices.

Every individual coming before an Oireachtas committee is advised that they enjoy no immunity for what they say. Even in Tribunals where people enjoy immunity they are entitled to protect their good name.

Nevertheless, the current enquiries can ruin people at the whim of the Chairman who can decide that somebody did not co-operate to his liking and so will not get their legal costs awarded to them. This means that not only do they lose months or years of their lives dealing with these monstrous political enquiries but they can also face personal financial ruin. The tribunals are not only a mess from the taxpayer’s point of view but also from the point of view of anyone involved.

The Supreme Court which seemed to be inclined to turn a blind eye to these injustices in the past has now seen the error of its ways and is less willing to see witnesses so abused. This leaves any new inquiry in a difficult position.

But why do we need an inquiry into the actions of private individuals and companies?
– The appropriate punishment for messing up in your job is that you are sacked or resign.
– The appropriate punishment for breaching regulations is prosecution and censure.
– The appropriate punishment for breach of fiduciary duty is civil liability.
– The appropriate punishment for fraud is prosecution and punitive civil liability.

It is clear that those who have suffered at the hands of banks and bankers do not have access to the information to piece together the wrongdoing. The banks are able to shield themselves with the expense and gamble of resorting to the law.

It is like a slander case where the witnesses will not co-operate. Do you go to court at a cost of tens of thousands of euros to subpoena the witnesses to repeat the slur and gamble that they will tell the truth and that the words will constitute slander? Of course you don’t. You get angry and then give up.

Worse again, the banks have huge resources to frustrate civil actions at every turn so that any victory will be years down the line and will have sucked the life out of the ultimately successful protagonist. The banks know that the lawyers will be slow to take another similar case even if they will win having seen what it did to their last client.

We need the following:

1. Greater transparency in banking.

2. Greater investigatory powers for watchdogs.

3. Compulsory publication of documents which could otherwise only be obtained through discovery (a kind of FoI for banks?).

4. Cheaper access to the law. People should be allowed to view documents and quiz witnesses under oath at an early stage and before putting their life on the line. A balance would have to be reached to allow the proper functioning of the bank but that could be done.

5. Whistleblower protection.

6. Better investigation and monitoring of banks by a body with equivalent powers to the Gardai to recommend prosecution to the DPP.

7. Regulations relating to banking Information Systems. Regulators/Central Bank should have access to all bank information systems with full rights to run reports and query databases (subject only to restriction on viewing individual customer names save in the case of suspected wrongdoing). [BTW – This should be an integral part of NAMA loan management but one suspects that such ICT issues have been ignored.] The banks should further be required to input all data into such information systems and to assign unique identifiers (i) to all customers, (ii) to all group entities and (iii) to all groups of related parties.

In the meantime, we need an Inquiry into the behaviour of the Financial Regulator and the Central Bank (and perhaps even the DoF) because these are the organs of state which failed to prevent this scenario arising. These are the organs which we must rely on in the future.

Eventually the Inquiry wil take place, will report, will be commented on and will be forgotten. I suggest that the Dept of Education put JK Galbraith’s hugely entertaining and apposite “The Great Crash, 1929” on the pre Junior-Cert (assuming it’s not abolished) history syllabus with a compulsory exam question on it.


re. PAC inquiry on DIRT – Questioning of Ministers
Was there some of arrangement agreed with Ministers not just on the form of questioning but also on the scope by PAC?

Looking beyond the immediate need for as complete an inquiry as we can in order to learn lessons on how we can improve our wayof governing ourselves and beating my usual drum, is this another instance of why we need as complete a separation between the Government/Executive/Rialtas and the Legislature/Representative/Dáil as we seem to have between the Judiciary and the other powers of our government?

“Where the executive and legislative powers are united in the same person, there can be no liberty” Montesquieu

It seems to have been made overly complicated.

The owners (the shareholders) can sack the board. The shareholders have lost 90-100% of the value of their investment due to the actions/inaction of the board. The shareholders should be disappointed in their performance. A strong owner would sack the board, the current owners are not.

The board can hire and fire senior executives. The board should be under pressure from the owners, the owners should want the board to recover some of the losses.

There is no need for a separate banking enquiry. The owners should sack the board. The new board should replace the current executives with better ones (sounds easy to find better but is probably not). Internal auditors should be sacked & replaced. New external auditors appointed. Large deals should be scrutinised for fraud. The people who were following directions/policies are not to be blamed and cannot be charged with anything.

Strong management together coupled with weak owners will create situations like this. The managment will take risks as they know that they will get a share of the profit if the venture goes well and they also know they are walking away from the losses if the venture goes bad. It is the owners who will be stuck with the losses so the owners should be controlling their managers.

The current owners should shoulder the responsibility of owning and replace the board. If they do, then there is at least a chance that what has happened will not happen again. If they don’t, then expect more of the same.

Is it the owners that are fighting against nationalisation?
I doubt it. If they’d stood up equally strong against their board & executives as it appears they are doing against nationalisation, then this situation would not have occurred.

The regulator cannot be blamed for allowing irresponsible owners to hire reckless executives who turned out to be making bad decisions.


The practical reality is that shareholder supervision of the boards has proven to be ineffective across the board intenationally. Furthermore, the board are responsible for drafting and agreeing their own employment contracts meaning termination may not be quite so painless.

I can only presume that zhou_enlai does not consider himself as belonging to the ‘salivating masses’. He lists a number of items which we need and I cannot fault any of them, but the biggest change we need is one of ‘culture’. We have to look beyond perception. How many times have you heard, “We have to be seen to be doing it right’ not ‘We must do it right’?.

The ‘mental reservations’ of Cardinal Connell and the ‘mature reflection’ of the late Brian Lenihan typify our cultural relationship with truth and justification.

We fault regulation in the banking and financial sector because we clearly see the results of poor regulation. The fact that our legal system is regulated by itself does not seem to concern anyone. Insurance costs for legal practitioners are increasing by the day. Has anyone thought to ask why?

Access to competent legal representation is only available to very few. Deliberate delay or as zhou_enlai says ‘sufficent resources to frustrate’ any but those with deep pockets and incredible persistence makes our legal system unavilable to most. And this system of delay is aided and abetted by our legal practitioners: the system is blamed when in reality it is the deliberate policy of the persons involved.

I’m also somewhat amused at zhou_enlai’s reference to ‘less democratic countries’ than ours. I just wonder what conception of democracy he is using. Doesn’t democracy entail some notion of accountability and actual rule of law?


Certainly the Governor of the Central Bank is not out looking for ‘revenge’ and enitehr is Colm McCarthy. The criminal justice process will bring errant bankers to book if they have a case to answer. It is, and msut remain, entirely separate to the inquiry that Colm and Patrick Honohan have called for.

Naturally those who are entirely pure of heart and always right in their own judgement want ‘show trials’ and ‘bankers in handcuffs’ and all sorts of emotionally gratifying morality play stuff. Some of them would also seek to boost their personal careers on the back of it. But it would be damn all good to the rest of society and wouldn’t do much to ensure that we don’t ever end up in the same place again with our banking system.

By the way, I don’t think that an inquiry will prevent future banking scandals. the most it would achieve is to lessen the risk of a similar one occuring in the future. ‘Where there’s brass there’s muck,’ and all that.


Insofar as I would take pleasure in taking a filling a few black marias with bankers from our more well to do suburbs, I consider myself to be a paid up member of the salivating masses.

I agree that we need the rule of law to observed and that one of our core problems is that certain organisations and people have been able to avoid the rules developed over time to protect ourselves from illegal behaviour.

My reference to “less democratic countries” might have been confusing. I simply wanted to point out it is a core value of our country that human rights and due process must be accorded to all. We must be careful to avoid Bush’s mistake of abandoning what is right and what defines us as good people in our upset at wrongs perpetrated against us.


show me a company where the board is not supervised by the owners of the company and I’ll show you a company where the board is taking advantage of the owners.

If you want the state to control private companies, and it seems you do, then you are saying that the state should run private companies without getting the benefit (the profits) of owning it. That is something I don’t think I’ll ever believe to be a good idea.

I thought the argument against nationalisation was that the banks should not be under public control and now the argument is that the banks should be under state control in all but name?

I do agree though, that in practice it seems boards are not as well supervised as they should by the shareholders, thus making a member of the board the highest paid low responsibility/accountability job out there.

@ Veronica,

Excellent comment above.

The trial of Howard Hughes for aeronautical contracts handed out in WWII springs to mind as one example of the kinds of play-acting, which has happened in the past.

I cannot find fault with Karl Keeter’s observation either that it is Dublin, not Rome. And we don’t require a circus. I hadn’t realised that 9/11 turned into a bit of a show trial. I am not well up on that history. But I do know the inquiry produced a report and that report was available to me or anyone to buy in any bookstore.

What I always hold in my mind is the JFK scenario. Forty years from now, what kind of presentation of the event do we wish to leave for people to study?


It is important for this generation of Irish people to leave some artifact there, to speak for themselves in years to come. A bit like the United States society found itself unable to account for flaws and mis-doings in their system after the faithful day in Dallas. But in a strange way, that generation of United States citizens will always be somewhat ‘on trial’ and somewhat ‘responsible’ for something they somehow ‘allowed to happen’.

Whatever documents are left around are important, as they serve as a main pillar in the defense of an entire generation and a society that existed in the 1960s.

“it would be damn all good to the rest of society and wouldn’t do much to ensure that we don’t ever end up in the same place again with our banking system.”
Perhaps you are right. It doesn’t seem to stop the scandals in the US. But it is not without merits:
– it will undoubtedly encourage some to behave in a more ethical way
– it reduces the moral hazard of bailouts (as you say, there will be future scandals)
– it can act quickly to stop specific abuses
– it will satisfy, to some extent, the desire for justice/retribution from the rest of society (i.e. it will fill a social good – ask any child what they consider unfair and it is somebody getting away with what they are not allowed to. There is no basic difference between this attitude and the rest of society, it is just a simpler form of fairness. If we are to justify wealth as a fair outcome for work, the work must be fair).

So, what we need is fair punishment for abuses. Unfairly acquired or structured bonuses, for example, have two components – those who set the short-term targets to achieve the bonuses (and should have known the dangers of what they were doing) and those who met them (and knew that there wasn’t a rats chance the bets wouldn’t turn bad). As you go higher up the corporate/regulatory ladder the culpability increases…

Irish bankers and regulators have shown themselves to be incompetent, from the top down. There is no justification for keeping them on in the jobs they have failed to do. As they are of systemic importance and have been effectively nationalised by the state, if they cannot remove their own incompetence, it must be removed for them.

Brian Cowen’s head on a plate, or anyone elses’ head on a plate would be very interesting news in tomorrow’s newspaper. Next Christmas, the bookstores would contain books about the event. In ten years time, the successful trial and execution of peoples’ reputations etc, would be less interesting to many. Time would have moved on.

Twenty, thirty, forthy years from now this notion that such-and-such politician ‘paid the price’ by resignation or whatever would be pretty meaning-less. A bit like reading Tom Garvin’s book about Sean Lemass today, is wonderful if you are an economist maybe. But it is quite far away from a lot of average readers.

That would be the outcome of a successful trial and execution type of format.

On the other hand, a document, an artifact, a residual account of events from many perspectives – that can only increase in value over the coming decades and no doubt, future generations would thank us for having the confidence to do some important self-reflection.

One thing that Tom Garvin did say at his recent lecture at the Royal Irish Academy provides us with a useful clue. One of the people best positioned to understand and comment about the career of Sean Lemass was past president Patrick J. Hillary who died in 2008. But as Garvin mentioned, no one bothered to interview Hillary before he passed away, specifically on the subject of Lemass. That opportunity is lost.

There are several possible separate but related benefits that could accrue from having an enquiry.

(1) We could expose political collusion, end a few political careers, and maybe even improve Ireland’s political culture…and I mean an across the board culture change, not just a temporary adjustment.

(2) We could expose criminal or civilly culpable behaviour in the banks, developers, regulators and politicians, and imprison people or potentially sieze assets. (asset siezures would not significantly impact the fiscal situation but either imprisonment or asset siezures might help make the mood more accepting of austerity). This could be important in reasserting the idea that “bad behaviour” is likely to have consequences.

(3) We could become leaders in corporate governance policy, particularly for the banking sector. (highly unlikely)

None of these are likely outcomes of any inquiry, no matter how it’s structured. They’re probably still worth aiming for as long as a credible structure can be outlined, whether that’s a CAB enquiry or a Garda enquiry or an invited panel of foreigners.

Another Tribunal is hardly a good plan.

Why do you presume people are looking for revenge? Can you not even comprehend the notion of ‘ethics’? You certainly have a greater belief in the Irish legal system than I do. The purpose of law is to have rules by which everyone plays the game, and if you don’t follow the rules there is some type of punishment as in ‘Go to gaol, do not pass Go and do not collect €200’.
To prevent people breaking the rules the threat of punishment lurks, but if people break the rules and then there is no application of punishment, why would you obey the rules in the first place? The purpose of bringing people to justice isn’t vengeance: it’s to prevent others thinking they can get away with it.
If you deliberately move money so as to provide a set of accounts which is not a true and fair view of the company for a number of years, should not those shareholders be entitled to recompense and the Board subject to severe repercussions? Also, for what purpose are accounts audited if not to ensure that the accounts are reasonably ok. I simply cannot believe that any audit could miss these money movements for 8? years.
More generally, I would ask why CFDs were permitted to purchase shares. it was widely acknowledged in the US in the ’87 crash that buying ‘on margin’ exacerbated the drop in share prices, as many accounts turned to negative equity and were then sold out by the brokerage firms.
Also, why would anybody in the public sector be worried about doing a good job?
We reward them with payoffs and a healthy pension and they get another job on the other side of the fence. This is about ethics, not revenge. This is the ‘culture’ change which is required.

On the other hand, a document, an artifact, a residual account of events from many perspectives – that can only increase in value over the coming decades and no doubt, future generations would thank us for having the confidence to do some important self-reflection.

After the last general election, when the first set of FF/GP talks broke down, the then Green Party leader Trevor Sargent plaintively asked: What about the Kenny Report?” as his colleague John Gormley stood beside him looking disheveled, as his dream of becoming an avatar on Planet Bertie, seemed to have evaporated.

Twelve years ago last month the Flood/Mahon tribunal was established. Compared with the level of bribery in the US system, politicians were shown to have come cheap but the cost of corruption was likely similar.

The Government went along with the lawyers’ cartel and paid €2,500 per day, which is apparently cheap by today’s going rate for those called to the exclusive inner sanctum of silks.

There has been no reform of the land rezoning system and the brown envelope has been replaced with legalised bribery.

Let’s not fool ourselves, any inquiry report would be a one-week feast in the media and absent political reform and the memory of the current crisis, we will be on the way to the third major economic disaster.

We hear a lot about changing “culture” in a very conservative society.

Maybe the only hope is a near-death of FF, and its return as a party of reform!

Regarding Cearbhall O’ Dalaigh’s link to the Joe Stiglitz talk to the UN,


I watched a bit of this talk. Low and behold, Stiglitz mentions the high ‘transaction costs’ of the financial services industry in the United States. Where financial services rose to account for 30% of all corporate profits, that in itself should be enough reason for alarm. Stiglitz maintained that financial services should not be an end in themselves. We cannot eat transactions, we do not ‘enjoy’ them like other produce of the economy.

Stiglitz even suggested that the financial services industry may have had a distorting effect on the economy. (Bearing in mind that Stiglitz’s view of financial services is much darker than that of Larry Fish, who views that sector as one of the few in which the United States remains competitive)

But lets take Stiglitz’s criticism for what its worth. You put Ireland’s commitment to developing a financial service industry alongside our distorting effect of Charlie McCreevy’s property tax schemes. Whereby 25% of GDP was tied up with construction industry activity – another huge distorting influence.

Between financial services and construction, what else is there in the Celtic Tiger? It is like half of our economy is based on activities which far from being sustainable, are more akin to distortions in any normal, healthy function-ing of an economy.

If I was an economist, I would surely use the term pro-cyclical to describe our policies, but who cares, it still adds up to the same thing.

Michael Hennigan:

“We hear a lot about changing “culture” in a very conservative society.

Maybe the only hope is a near-death of FF, and its return as a party of reform!”

I don’t worry so much about changing culture to be honest. Look back at the society of JFK in the United States – you could not have held onto that culture, even if one wanted to. Even if one had the entire resources of the US government services at one’s disposal. It simply wouldn’t be possible. That culture was a snapshot in time.

No more than the Ireland of 2009 is a snapshot in time. One thing is pretty much guaranteed, future generations of Irish people will not want to associate themselves in any way with the ‘culture’ we live in right now. We are only fooling ourselves if we believe the culture is Ireland, will not change. My fear is more of the opposite, it is going to change no matter what, but how is it going to change?

It is interesting when one reads Shane Ross’s book, The Bankers that Bank of Ireland for instance, helicopter-ed in some ‘blast-from-the-past’ to try and re-establish the bank on firmer footing. Am I the only one who has noticed the number of ‘Space Cowboys’ rampaging around in high level board room positions of late?

It is like Ireland’s future, is to go back to the Ireland of at least 20 years ago. If I searched, I could probably find a Brian Vader quote or two, which amounted to the same thing. We are trying to re-institute the culture in Ireland, but we are trying to re-invent 1985. Without the dodgy clothing I presume.

@Brian O’Hanlon
I’m certainly not suggesting we ‘go back’ to any period of Irish business culture, and I’m not sure how great the JFK years were. What I do know is that anyone who criticised the excesses of the Celtic Tiger years was accused of envy, begrudgery and negativity. Now, those who want a real analysis of some of the actions which brought us to where we are, are being accused of salivating at the thoughts of revenge, vengeance and heads on the spike.

There is no better way to stop people making critcal comment than going on the offensive and accusing them of negativity and envy and witch-hunts.

I wonder what characteristics were most important for ‘audit and compliance’ employees in Ireland: that they know how to turn their eye away at appropriate times, an ability to note and list minor infringements whilst ignoring any serious issues which are of ‘corporate importance’.

WE have to look at systemic issues such as the ‘short term’ concentration on share price, whilst ignoring long term stability. If, as Karl Dieter says repeatedly, neither the banks nor auctioneers did anything wrong, they just maximised profits, then we are in a-catch-me-if-you-can situation and we need ‘ferocious regulation enforcement’. However, I think we should build a culture of ethical business behaviour where people will mainly regulate their own behaviour, but with serious repercussions for those who don’t follow the rules.

We need to change behaviour in all the professions; it isn’t just business.
Accountancy and law don’t look so hot either.

@ Polly,

I didn’t intend to imply above, that the generation of JFK’s administration in the US were ‘outstanding’ or a model of any sort to judge other generations by. I only picked the JFK era as an example of something that in the popular mind is identifiable as a time, a place, which is somehow different from that we live in today. But I am sure there were a large number of people in the early 1960s who thought, things will never change. We have arrived at a time and place, and things are more or less settled as they are.

I do believe the effort to change culture is a bit futile. It is like like trying to change the climate – oh yeah, we are trying to do that – but you know what I mean.

The thing about culture, it seems to be subject to the law of tipping points. Take the year of 1968 for instance. It seems like a succession of things kept on happening around the world. Things just kept happening. Someone who lived through that time joked once, the fact he had so much LSD available to him, probably convinced him even more than the world was really getting un-stuck. But the point is, a lot happened at once. Or a year after, or a year before that point.

But what is so special about 1968? Why did it define so much of ‘culture’ in many ways for a long time afterwards? Those are questions that some modern historians are coming to terms with only today.

A useful reference is Malcolm Gladwell’s book The Tipping Point. In that book he describes the mayor of New York City and his attempts to subtley change the culture of that city. Which had been sliding down hill for quite some time, to the extent that many had given up on it. Then suddenly, as if for no reason whatsoever, things began to improve.

This seems to be one of the points in favour of a ‘mayor for Dublin city’. Indeed when people reflect on changes to Dublin city in recent history, people usually extract individual ‘tipping points’ which subtley changed the flow, and resulted in massive un-expected change. It is interesting to see a member of the ‘Dublin Transport Organisation’ on the board of NAMA I believe. That particular transport organisation was intended to create a good overview for the city’s development. Something that suffer-ed because of the choice to go with 4 no. different authorities to administer the development of Dublin.

I believe what scares people in power the most – be it the banking, financial system, political system or whatever professional body out there – is a public that is informed, a public that knows how to make choices, a public that in short can detect the crap.

That is the one thing that seems to exert real change. I am surprised this point has not arisen sooner on this commentary on the IE blog site.

So taking that point on board – I conclude, it is simple. We blame all of the journalism profession in Ireland for not informing the people better during the Celtic Tiger.

Am I being a tad un-fair?

@Brian O’Hanlon

Re: transaction costs

Nama expects to spend more than €240 million a year, including liquidation expenses.
Running costs – €30 million.
Banks and other providers service fees – €51million per year.

The plan assumes that only 20% of Nama’s €77 billion loans portfolio will default.
BUT it anticipates spending nearly €1.4 thousand million on liquidation costs.


The other serious hazard in terms of going down the road – we are going to change the culture, is as follows. I commented here:


About the McCreevy era of Minister for Finance where the private sector in Ireland was massively guided in a certain trajectory by a central planner. McCreevy is the last person in the world, I am sure who would like to be remember-ed as a ‘central planner’. But who knows, perhaps the label will stick?

Given the notion that McCreevy might have managed to influence the economy in a given direction, with its growth and development, we have to be careful to say the least with our attempts now to influence ‘culture’ one way or another. It is quite possible in Ireland that we micro- manage down to such a degree where we don’t breed fighting beasts any longer, capable of competing on the global scale. But instead we produce house pets.

@ Cearbhall O’ Dalaigh,

I see where you are going, yeah, it’s shock-ing.

To top it all off, we have spent the last decade in this country trying to exercise a model of free market operation – only to arrive at one of the most expensive and comprehensive central planning arrangements undertaken by any state in the EU zone.


It seems it is all right to send people to jail for petty theft not having a TV license but we are led to believe that it would serve no useful purpose to send white collar criminals to jail. Really? Give me a break half the county want white collar criminals to be held to the same legal standards as the “little people”.

This is not about “revenge” it is a test to see if we have a rule of law at all in the country. If we have not, then people will not subscribe any longer to a corrupt, financially and morally bankrupt system. The system is on its knees least you have not noticed.

@ Robert

no issue with sending white collar criminals to jail. And no issues with having a very thorough inquiry. I think the important point is that they need to be conducted seperately. The inquiry, from a constitutional point of view, may in fact be unable to deliver any “heads on plates” that lots of people seem to want to get. Indeed, looking for these heads on plates may scupper the entire notion of an inquiry altogether from the get-go, as the Oireachtas discovered in the Abbeylara debacle. The criminal justice system needs to deliver convictions and statements of judicial fact completely independent of an enquiry. The enquiry simply needs to figure out the truth and nothing more. If the facts lead to other proceedings, then so be it.

Reading through some of the comments at this point in the discussion, there seems to be confusion as to what any inquiry can actually do. An inquiry by the PAC, an independent Chilcot-style body (as I suggested) or a Tribunal is not a court of law. It does not dispense justice nor can its report or conclusions constitute evidence of wrongdoing. Its report can be refered to the DPP, but the authorities will then have to separately prepare their own case in order to bring any matter raised in any such report to trial. They can’t tear a few leaves out of the report and run before a judge saying that this is evidence of wrongdoing by any person. If they do, they will get thrown out.

We need an inquiry into what went wrong with the processes and structures of our banking and regulatory systems so that obvious flaws and weaknesses can be rectified. That, and a greater public understanding of how it all happened, is about the most any inquiry can achieve. It’s nothing to do with ‘ethics’ or ‘if we have a rule of law at all in this country’. Anyone seeking retribution from the exercise is likely to be sorely disappointed.

How the inquiry is constituted is therefore very important. It has to be done in such a way that it will get at the facts of what went wrong, not provide opportunities for politicians whose ambitions exceed their abilities to further promote their careers; the media to foment bouts of collective hysteria and shock and outrage on a daily basis in order to sell newspapers or boost phone-in programme ratings; or allow bankers, officials or serving politicians to have recourse to the courts to ostensibly protect their reputations from unfair attack but, in reality, to frustrate the inquiry. We’ve been there, done that several times over already, at great expense to the taxpayer.

@Brian O’Hanlon

It seems to me you are both missing something important and that is unless people actually believe there is a price to pay for ignoring the rules, they will continue to ignore the rules. Veronica, your attitude to ‘ethics’ and ‘rule of law’ comes over as ‘What idiot believes in such banalities?’ whether you intended it as such or not. I agree that politicians and the media will take advantage and will highlight issues which are not terribly important and ‘the right to my good name will be bandied about interminably’, but we cannot run scared and neither must the Law. The government ran scared from the Judges on the Pension Levy, I believe unnecessarily. If I’m wrong, it’s simple: let’s have a referendum on whether Judges should pay the Levy and the more recent decreases.

We simply cannot have it both ways. If the reality of corporate life is that the only purpose is short-term profit maximisation, and practitioners use all means to achieve this end, then ‘strict regulation coupled with strict enforcement and severe penalties is the only answer’.

There simply is no point to any inquiry which does not name and shame, and then give the evidence to a court of law who can punish the persons mainly responsible and that’s not being vindictive or salivating at the thoughts. It’s simply to show that regulation matters and those who do not play by the rules will be punished.

Democracy depends on some form of implied consent of the terms of cooperation of all in society and if a majority decide that those terms of cooperation are not fair and do not apply to all, we may face serious consequences for the legitimacy of government and law.

There are no guarantees for stability in 2010.

@ All,

I am probably not as well informed on the law as other contributors to this discussion. But I have benefitted somewhat throughout the year while reading Dearbhail McDonald’s pieces in the Irish independent. Certainly it has drawn my awareness to a debate which needs to occur in relation to the legal system in Ireland.

I would also like to thank Sandeep Gopalan for linking to his blog recently also. It seems there was a lot of effort put into the blog, and I am looking forward to reading some of it’s entries on the subject of a financial investigation.

Does it not strike anyone, the fact that Ireland requires this whole new infrastructure which will ‘fit’ right with Ireland’s new green-er policy and direction – while at the same time, Irish seems to be experiencing so many ‘growing pains’ on its other ‘systems’. Be they legal, economic, financial, industrial, political, legal. Practically everything seems to be in need of rehab at the same time.

Why didn’t this urgency become so noticeable during the ‘boom’ times? Why has all of this stuff suddenly surfaced now? Why are we so poor in Ireland at reporting on stuff that needs to get done? Is it because we still struggle to envision what the future will look like? Was property and indulgence a kind of opium for society, which guaranteed we were effectively ‘whacked out’ while pressing needs grew and grew?

All good questions.

That renewable energy as one instance where the law does come into it big time. It appears as though in terms of satisfying the nation’s energy requirements via cleaner, safer means – we started with a planning system for the country, based around domestic buildings.

This planning system legally was extended to include larger commercial development. Now that system has been stretched beyond a point where it aught to be, and we have a pathetic situation whereby each new wind farm has its own individual planning process. Instead of something like an ‘overall’ energy roadmap for each county in Ireland.

In other words, at certain turns in the road, Ireland is going to have to do the opposite to working within our existing, over-extended legal frameworks – and instead, detach itself completely from existing legal frameworks, in order to lay foundations for a new approach.

The argument that Ireland aught to tie itself back to legalities. That Ireland should not shy away from battles which need to be fought through our existing legal channels – is a crucial point. However, to counter-balance against that argument, we should bear in our minds the need to maintain an open mind.

Sometimes we have to lay a bit of new train track, a bit of new framework. Over the period of the next decade or two, there will be instances in which Ireland will attempt to try something new, do something for the first time. The seems to me to be a legitimate strategy also.

Something else that springs to mind. Cearbhall O’Dalaigh linked to a Joseph Stiglitz lecture above. It brought up the subject of transaction costs in financial services. Cearbhall made a comment above later:


But also look at the ‘transaction costs’ in terms of planning permission for wind farms and such. Okay, the debate rages about the most cost effective means to supply power. But lets look at wind for a second.

I am informed that in order to get into the wind business, one requires 3 no. items. A license to connect ‘X’ amount of power generation capacity to the national grid. One requires the right to use land for the means of energy generation. One requires an agreement with the wind generation equipment maker to make and deliver the gear to your chosen location.

It is kind of difficult to gets those 3 no. things in alignment. Worse, as I understand it, there are considerable mis-matches. Certain parties are granted one piece of the triangle, without holding the other parts. Apparently, a situation can exist where these 3 no. parties find it hard to make a deal, or even find one another.

I guess these are the kinds of problems we will encounter more and more. Elaine Byrne writes sometimes in the Irish times about the institutions in Ireland and how they function. It is up to ourselves I guess, how we look at this and propose solution(s). Elaine Byrne had one very good story about a piece of ground in Cork city which was threatened by a local Irish school for building land. Interesting story.

I am always reminded of Edward De Bono’s teaching. The biggest challenge facing humanity going forward is the ability to think. It goes beyond mere disciplines, professions and so forth. It requires a lot of people to be able to think, and to think together. De Bono’s workshops are full of little ‘problems’ he puts to his students. Like the problem I described above about the wind farm. I only use it as an example.

But one could probably find examples all over the place. In every sector.

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