Introductory Statement by Governor Honohan to Joint Oireachtas Committee on Finance and the Public Service Post author By Philip Lane Post date March 3, 2010 The opening statement by Governor Honohan can be read here. Categories In Banking Crisis 8 Comments on Introductory Statement by Governor Honohan to Joint Oireachtas Committee on Finance and the Public Service ← AIB Preliminary 2009 Results → Pumped hydro is the flavour of the week 8 replies on “Introductory Statement by Governor Honohan to Joint Oireachtas Committee on Finance and the Public Service” @ Patrick Honohan, “As you know, I have been asked by the Minister for Finance to prepare” Well, I see your problem right there. The “current” Minister has, what they call, an “agenda”. You will outlast this Minister of Finance. You are the Governor of the Central Bank of Ireland. I do hope for the sake of us all that you are not a subject of the Minister’s agenda. I do hope that you see yourself not as Subject but Citizen. If you serve not the Citizen you make us all subjects. If you would make me a “Subject” you could at least let me know the name of the King or Queen to whom I am subject. . . “This seems to me to be a good basis for proceeding” Spoken like Thomas à Becket. “The two-stage approach to the investigation speaks of “preliminary reports” which will provide a basis for the Government and the Oireachtas to prepare the terms of reference for the second stage, which will involve the establishment of a Statutory Commission of Investigation.” “for the second stage” Will Henry II be Monarch then, or will Becket survive the assassination and give religion to money. Beware the Plantagenet, they breed like flies on horse. “I am hopeful that satisfactory conclusions can be reached on many issues, leaving only a relatively limited number of open questions of significance requiring further investigation.” Absolutely Jesuitical. “Evidently, the full picture requires that dimension also: after all, it is to the directors of banks that we look in the first instance for safe and sound operation of their firms; official prudential regulation can best be seen as a backstop designed to restrain the behaviour of imprudence or recklessness. Clearly in this case neither the first line defence nor the backstop worked.” Here I disagree. “official prudential regulation can best be seen as a backstop designed to restrain the behaviour of imprudence or recklessness” You are making the error that the supply of money is not at the will of Government. It is. It has been. And it will continue to be,. Restraining the behaviour of those who create money is your job. It also was you predecessor’s job. Perhaps you do not believe that self interested individuals who control licensed banks can create “money”. I believe they can. I believe the Central Bank gives them licence to do it. Money is created by creating debt. Debt is the currency of money creators. Of course there comes a time when the debt collector calls. What I am not at all sure about is whether the Central Bank knows that there comes a time when it is not the State or the Citizen that pay for the debauchery of money but those who created it. It’s their money. Let them have it. What’s left of it. Don’t bankrupt the State and every Citizen in it to pay for their glorious ambition. “In addition, I have been asked to consider the inclusion of any matter that I feel should be brought to the Minister’s attention which might help or inform the preparation of the terms of reference of the statutory inquiry.” “that I feel should be brought to the Minister’s attention” Would it not be preferable if you ignored the “Minister’s attention” and behave as Citizen first. The “Minister” does not report to a Monarch, such that his “attention” should be brought to “matters” that a Monarch might consider important. You as an office holder are responsible to the Citizen and only the Citizen. @Citizen Greg Great quote from Goethe in EuroIntelligence this morning : “There is nothing more frightening than ignorance in action.” At least this is one charge that The Governor is not ‘subject’ to. As noted previously, he has been put in on a rather sticky wicket – which he acknowledges here in a subtle cut to the boundary – i.e. investigate that which he himself now leads: and there may be a subtle, and perhaps latently strategic, background to The Minister’s decision in doing so: if in this instance, The Minister made a ‘right’ decision – mirabile dictu – in the appointment of The Governor in the first place. Returning to Goethe and looking around at the broader policy picture on 18 months of Irish crisis management: “There is nothing more frightening than ignorance in action” – Discuss. A small but informative selection of Governor Honohan’s academic record FWIW, most full texts available: http://irserver.ucd.ie/dspace/items-by-author?author=Honohan%2C+Patrick @ UCD Institutional Repository Interesting links. @ David O’Donnell, It’s probably fair to say that there is no better man than Patrick Honohan to scope the investigation. However the Court of Cowen the Communicator is a place of smoke and mirrors. There be monsters. Thanks for the Satyajit Das link. “Some structures are also designed to circumvent investment restrictions, bank capital rules, and securities and tax legislation.” Indeed. @Greg “On 30 July 1998, Alan Greenspan, then Chairman of the Federal Reserve argued that: “Regulation of derivatives transactions that are privately negotiated by professionals is unnecessary.” In October 2008, the now former Chairman grudgingly acknowledged that he was “partially” wrong to oppose regulation of credit default swaps (“CDS”). “Credit default swaps, I think, have serious problems associated with them,” he admitted to a Congressional hearing. His current views on wider derivative regulation remain unknown.” Oh .Nooooooo He is probaby down with Mairt_een Feld_steen and MockaBabyBob in the ayn_een randites’ recovery group around Merrion Square – thought we had restricted access there ……. Satyajit Das link below – musn’t forget me netiquette ……… (-; http://www.eurointelligence.com/article.581+M546a7fef8b5.0.html Some very heartening statements from Prof. Honohan: “…I believe it will be possible for me to establish a fairly clear and comprehensive understanding of the matters in question. I am hopeful that satisfactory conclusions can be reached on many issues, leaving only a relatively limited number of open questions of significance requiring further investigation.” “In addition, I have been asked to consider the inclusion of any matter that I feel should be brought to the Minister’s attention which might help or inform the preparation of the terms of reference of the statutory inquiry.” “When I last appeared before an Oireachtas Committee in December, I said that “we understand some of what happened, but some of it is still hard to understand”. We are already putting in place new procedures and arrangements that take account of what we have learnt to date. I hope that my report can help develop that understanding further and help us all emerge from our current difficulties with a degree of restored confidence.” It sounds like the report should help the second stage inquiry “cut to the chase” fairly rapidly. The inquiry and Patrick Honohan’s work relating thereto should be carried out to a high standard, especially if his most recent performance before the JOCFPS is anything to go by. The question is whether any of the civil inquiries, the separate investigations by IFSRA, the ODCE investigation, Garda Bureau of Fraud and those also of CARB will lead to any civil, regulatory or criminal actions and even if they do, will there be sufficient evidence for civil or criminal redress? The public are a harsh judge. Notwithstanding the quality of the investigations/inquiries, the quality of laws on which they are underpinned will be critical. So too will be the controls over the chains of evidence. Those laws/rules were written at a different time in history and were not drafted in contemplation of the issues we face today. Let’s hope when Patrick’s inquiry completes we don’t shot the messenger because the wrapper doesn’t deliver the goods that the public want. This is equally relevant in terms of various and numerous Oireachtas committees’ members that appear to have a habit of turning on those who don’t deliver the outcome the members want to hear. Comments are closed.