Elderfield at the Regulatory Committee

The transcript of Matthew Elderfield’s appearance at the Oireachtas Committee on Economic Regulatory Affairs is here. Reading over the answers, this was clearly a very impressive performance by Mr. Elderfield, one that signalled a break from past practices and attitudes in a number of ways. There are a couple of issues arising from Mr. Elderfield’s comments that I would like to discuss at greater length but don’t have time to discuss now, so for the moment I’ll leave it to our commenters to dig through the transcript for interesting material.

24 replies on “Elderfield at the Regulatory Committee”

There is lots of interesting stuff in there. The comments about the Irish Stock Exchange are only the tip of the iceberg with them. Where were they on Anglo’s share trading? And his diagnosis of the failure of the regulator due to under-resourcing sets up the classic FF two-step on any critical finding: refers to the past, problem now corrected. One wonders if a critical mass of journalists, let alone voters, will go further and ask why we had an under-resourced regulator when there was money sloshing around for so many other things.

The Chairman:

“I draw your attention to the fact that members of the committee have absolute privilege but the same privilege does not apply to witnesses appearing before the committee.”

The Chairman:

http://www.fiannafail.ie/people/michael-moynihan/

does a good job.

http://www.fiannafail.ie/news/entry/outdoor-play-funding-for-meelin-national-school-moynihan/

I hate to burst the Chairman’s bubble here but neither he nor his committee have “absolute privilege”.

Absolute privilege is the privilege of an absolute Monarch (or if you are of a religious perspective a Pope).

The Chairman might want to consider that he chairs that committee on the behalf of Citizen.

The Chairman might want to consider that in a Republic, Citizen is absolute not he or the selected membership of his committee.

“but the same privilege does not apply to witnesses”

The Chairman asserts his absolutism.

The Citizen is not free to speak.

Elderfield says,

“Before 1 November 2007 these complaints could have been referred to the Stock Exchange, but subsequent changes to the Stock Exchange’s rule book mean no one can raise a new concern about a pre-November 2007 transaction with the exchange.”

Elderfield draws his line in the sand.

Will Elderfield look back?

Is it not the job of the Regulator to look back as well as forward?

Are we all supposed to be sheep flocked on by the self interest of wolves?

A Regulator is nothing if it takes the job of moving the sheep forward.

Will Elderfield insist on and use his power to investigate insider trading on the Irish Stock Exchange?

I don’t think so.

Greg, chill out.

Elderfield is limited in what he may and may not do by his legal mandate – he has no authority regarding nama. The guy’s only been in his office since about February (I think) and he’s already making an impact. Not everything has to be a big conspiracy.

Higher priority cases than an insolvant insurance company that continued to trade? Please tell me about them.

Joseph,

Not everything has to be a big conspiracy.

I don’t believe in conspiracy theories.

I also don’t believe in hagiography.

MarcusOC,

“he has no authority regarding nama”

Did I mention NAMA?

But now that you raise it, he has considerable authority regarding NAMA.

I’d go so far as to say that after the Minister for Finance he is the most powerful person in the Republic wrt NAMA.

NAMA covers six “institutions”.

Each is required to have a minimum solvency level.

I don’t have the power to enforce that. You don’t.

The Regulator does.

@ Joseph,

Apologies.

That was a reply to MarcusOC.

You are correct.

An insurance company that has a deficit of €150m?

Petty cash.

He could easily have kept it quite for a month and given Quinn & Co an ultimatum.

Put up or shut up. Oh and by the way Sean, I don’t like you. You will resign by 31st May. You have until the end of April to find the money.

What damage could have been caused in the mean time?

Virtually none.

@ Greg

An insolvant bank that has been nationalised. The regulator is there to protect consumers and the financial system. He is not there to protect banks as you state. Too late for him to do anything with Anglo. That was up to the previous regulator.

He has come in and has done what has been asked from him so far. You criticise him for the Irish Stock Exchange. That is a legislative failure and is not down to him. If you have evidence of insider trading on the ISE, I am sure he would love to hear from you.

As for NAMA, what powers does he have?

@ Greg again,

Quinn had been made resign by the previous regulator. The rules are the rules. It’s because the rules were bent and they weren’t enforced that we are in this mess. If you want that sort of regulation again then fair enough but the new guy will do for me.

If €150m is petty cash, why hasn’t it been found yet? What damage could have been caused? The insurance company could have gone under. It would have been discovered that an insurance company that trades here and in the UK was allowed to trade while insolvant by the Irish Regulator. I can the FSA’s reaction never mind the rest of the financial markets.

@ Gavin S

“An insolvant bank that has been nationalised.”

Did I name a bank?

They are all insolvent.

“You criticise him for the Irish Stock Exchange.”

I did not.

“That is a legislative failure and is not down to him.”

What was a legislative failure?

“If you have evidence of insider trading on the ISE, I am sure he would love to hear from you. “

Not my job. But if it were I would be looking are the movement in the share prices of banks from June 2008 to present. Then I would decide whether or not totake the matter further.

But hey, maybe you’re of a mind to “go forward”.

@ Gavin S

“The rules are the rules.” Would that be “going forward”?

“What damage could have been caused? The insurance company could have gone under”

If it could have “gone under” on 1st April it is in the same position now.

“I can the FSA’s reaction never mind the rest of the financial markets.”

The FSA could have been informed. And I’m sure they are realistic people. They would know that giving Quinn & Co 30 days (while the Irish Regulator held the cheque books) was not going to cause any more damage that closing Quinn Insurance to new business.

Quinn were given two years to sort out the mess. This didn’t happen overnight. Anglo were given time to sort out the Quinn mess as well. Look what they did with the time they were given.

Before 1 November 2007 these complaints could have been referred to the Stock Exchange, but subsequent changes to the Stock Exchange’s rule book mean no one can raise a new concern about a pre-November 2007 transaction with the exchange.”

Elderfield draws his line in the sand.

Will Elderfield look back?

Is it not the job of the Regulator to look back as well as forward?

He said he can’t look back because the ISE changed it’s rule book. He talked to to AG about it and was told there was a legislative problem with looking at complaints pre 2007.

The new regulator is to be congratulated for playing strictly by the rules.

However there does seem to be more to this than meets the eye..

Cantor Fitzgerald (HQ in NY) arranged the CFDs, to help SQ do a Philip Green-style stealth takeover.
Assuming CF knew of Anglo’s imminent demise (like Paulson/Goldman with the ABACUS shenanigans),
this would have put them in a position to rip the stuffing out of SQ if-and-when Anglo went under.

I daresay Cantor and pals were busy shorting the bejaysus out of Anglo for good measure.

So assisting SQ’s attempted Anglo takeover was in fact a means to profit hugely from Anglo’s downfall.

Further, UK insurance competitors to Quinn had been bleating for years (FT) that Quinn was unsustainably undercutting thm (actually SOP in the insurance biz to establish a market presence).

Qui Bono?
– cantor make out like bandits
– UK insurers take out a competitor

Irish taxpayer lumbered with the debt. Wheeee.

I agree with Greg – Quinn is just a red herring to distract attention from his lack of enforcement of solvency regulations in the banks and, compared with the – think of a number -billions being fired at Anglo and the rest, 150millions does seem like chickenfeed.

@Greg

“I hate to burst the Chairman’s bubble here but neither he nor his committee have “absolute privilege”. Absolute privilege is the privilege of an absolute Monarch”

Absolute privilege is a legal term, as distinguished from qualified privilege. He was merely noting the ground rules, as he is obliged to.

@cynic:
“Qui Bono? – cantor make out like bandits”

A singer (or cantor) with a popular beat combo.

bjg

@Greg

‘all the banks are insolvent’ – good to get a reminder.

‘legislative problems’ – aren’t there always? Dail Committees are presently ‘power-less’ – s’pose a constitutional amendment to run with the three by-elections in June might put a bit too much pressure on the sheeply shopping …

ye i thought privliege comes in two forms absolute and qualified. Qualified priviledge being lost where bad faith is shown, whereas absolute priviledge is not. judge in court and td in oireachtas having absolute priviledge

May I recommend two interesting speeches/articles:

1) Julie Dickson, head regulator at OFSI in which she provides comments on why Canada dodge the bullet. But equally she gives some advice to economies like Ireland without mentioning us by name. See http://www.complianceireland.com/HotTopics.html#OFSI_Speech_Risks

2) Why we need a resolution authority for Europe’s banks by Marek Belka is director of the IMF’s European Department and a former prime minister of Poland. See http://www.ft.com/cms/s/0/59378854-4da5-11df-9560-00144feab49a.html?nclick_check=1

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