Uncategorized – Page 113 – The Irish Economy

Independent TD Stephen Donnelly has resigned from the committee of TDs and Senators charged with investigating the banking crisis. This follows a week where the government lost a vote, then rammed home changes to the composition of the inquiry committee to ensure it had a majority.

The reasons why the government lost the vote aren’t really that important. Remember both Houses held full debates on the establishment of the banking inquiry and the Government then unilaterally amended the motion that established the inquiry when it was clear it wouldn’t have a majority. It could have simply said ‘yeah we messed up, but you, know, custom and practice, lads’, and moved on, or allowed the inquiry to proceed unmolested, but then the Taoiseach defended the action to impose a majority, claiming the government wouldn’t have enough control over the inquiry:

you [presumably the government] need to able to approve terms of reference, a work schedule, and you need to able to approve a report at the end of it.

It all kicked off, and Donnelly resigned. There were some tense exchanges between Deputy Donnelly and Minister Leo Varadkar on radio on Sunday morning. Since then the polls tend to show support for Donnelly’s decision.

There have been several direct and indirect investigations into the circumstances surrounding the banking crisis. The Honohan report, for example, looked at regulation but obviously delved deeply into banking matters as well. None of these investigations have taken place in public, and none dealing with the ‘run up’ to the banking crisis, from the late 1990s to 2013 when we exited the bailout, or from 2002 to 2013. Colm McCarthy has a good post on why the terms of references should extend that far back.

The credibility of any findings from the new banking inquiry have clearly been called into question. Colm gives an explanation for the clear need for another inquiry:

The inquiry should explore whether any warnings were voiced within the banks, and whether the banks paid any attention to the warnings available from other sources. It should also explore the failure of international monitoring by bodies such as the European Commission, the IMF and the OECD, all of which produced excessively complacent assessments in the years leading up to the crisis.

Colm finishes with the sentiment I think we’d all hope the inquiry leads us to:

The inquiry is about accountability, not about dishing out retribution.

And yet, following last week’s events, commentators can’t help asking every government and opposition talking head what the ‘real’ reason behind the banking inquiry is.

As usual, Miriam Lord put it best, this might well simply turn out to be the Oireachtas Committee on Embarrassing Fianna Fáil over the Banking Crisis.

Accepting that there will be no rowing back of the appointment of the two Senators, in the interests of increasing the credibility of the final report, there are two remedies I can see. The first is that one of the newly appointed Senators resigns and is replaced by Stephen Donnelly, without any admission of guilt on the government’s behalf. This partially restores the credibility of the committee while co-opting Donnelly back onto the committee, which really could use his advice and expertise.

The second is for the non-governmental committee members to resign en masse once they’ve seen the terms of reference, especially if they don’t like what they see, particularly in terms of the time frame the inquiry will cover, the role of the banks, regulators, and the media in the run up to the crisis, and processes to ensure accountability trumping retribution.

Update (Wednesday 18th): Well, that’s that then.