Wednesday 7 December 2016

Banking Inquiry: From Bertie Ahern to David Drumm - what it found about key players

Kevin Doyle and Niall O'Connor

Published 28/01/2016 | 11:40

Political moves: Ahern with Brian Cowen in 2009
Political moves: Ahern with Brian Cowen in 2009
The ‘soft landing’ predicted by former Taoiseach Bertie Ahern never materialised
Former Financial Regulator Patrick Neary
David Drumm
Former Taoiseach Brian Cowen
Professor Patrick Honohan. Photo: John Ohle
Former ECB president Jean-Claude Trichet addressses members of the Oireachtas Banking Inquiry at the Royal Hospital Kilmainham. Photo: Frank McGrath

From Former Taoiseach Bertie Ahern and ex Anglo Irish Bank executive David Drumm, the banking inquiry made findings on the key players.

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Here's what it found:

Bertie Ahern

Former Taoiseach Bertie Ahern predicted there would be "a soft landing" for the Irish economy.

The almost "universal adoption" of the theory was a "key failing for the Government, Central Bank and Finance Department, the Bank Inquiry found. Its report notes how Mr Ahern said he was "horrified" when he learned there were only "15 or 20" staff supervising the five main banks.

Elsewhere, the report notes Mr Ahern accepted government expenditure "was too high by 2007".

The report also says Mr Ahern acknowledged that reliefs in relation to the construction sector had helped create and sustain the property bubble.

During his testimony to the Inquiry, Mr Ahern spoke of how he "got a lot of things right".

Apologising for his mistakes, he said: "If hindsight was foresight, I'd be a billion- aire."

Patrick Neary

THE Banking Inquiry found that the Financial Regulator adopted a "light touch" approach and that it and the Central Bank "had the powers to intervene [to prevent the crisis], but neither did so decisively".

Patrick Neary was chief executive from 2006 to 2009. The Inquiry heard the office could have "done more" in imposing capital requirements on the banks. Mr Neary accepted "there were tools available to us".

Elsewhere, Mr Neary acknowledged that "the banks were effectively able to breach the [lending] limits without fear of any consequence".

The Inquiry heard how the Central Bank had a role in regulating and promoting financial services.

Mr Neary called this "irreconcilable with the role of a regulator".

On September 25, 2008, four days before the bank guarantee, he advised that it could cost around €500m.

David Drumm

CONTROVERSIAL Anglo banker David Drumm refused to appear before the Banking Inquiry to discuss his involvement with the institution at the centre of the country's financial collapse.

Mr Drumm is currently sitting in a US prison awaiting the outcome of his extradition trial.

The inquiry requested that he appear before a hearing last year to give evidence regarding his time at the helm of Anglo Irish Bank in the years leading up to its collapse.

Mr Drumm turned down the request, but said he would appear by video link and also submitted written evidence.

After a number of days of debate and advice from the Director of Public Prosecutions, the inquiry decided it would not accept either offer from Mr Drumm.

Other Anglo bankers, including Sean FitzPatrick, could not attend hearings due to ongoing legal actions.

Brian Cowen

FORMER Taoiseach Brian Cowen was aware of problems in the financial sector as far back as January 2008, according to the Banking Inquiry’s final report.

Mr Cowen admitted he was aware of a Department of Finance report setting out the options available to the Government in case of a financial collapse, which included the possibility of  a bank guarantee in early 2008.

He signed off on both the controversial guarantee and Troika bailout programme.

Both measures resulted in the taxpayer picking up the tab for the failed investments of bankers and developers.

In his opening statement to the Oireachtas Committee, Mr Cowen insisted that nothing he would tell the inquiry should be seen as him “passing the buck”.

“We made policy decisions with our eyes wide open,” he said. He admitted that policy decisions he made when Taoiseach and before that as Minister of Finance were influenced by approaching general elections.

Mr Cowen said he received regular updates from the regulators, but concerns were not raised.

“I would have expected that any concerns would initially be escalated through the existing channels  of the Central Bank and Financial Regulator through the Secretary General of the Department,” he said.

“Any  briefings I received from the governor of the Central Bank and through the financial stability reports were overall conclusively positive,” he added.

Mr Cowen said that during the “good times” banks were seen to be a “good business to be in” and no one was aware that there were any problems in the industry.

Patrick Honohan

WHILE government ministers claimed that the country was not seeking a bailout in November 2010, then Central Bank governor Patrick Honohan went on radio and said he expected the opposite.

The inquiry heard how the late Finance Minister Brian Lenihan was “irritated” by it, but “only ever irritated briefly”, according to an adviser.

“Was I trying to contradict the Taoiseach? Was I trying to contradict other ministers? No, I wasn’t trying to do that,” Mr Honohan (right) told the Inquiry.

“Maybe I wasn’t sufficiently attuned to the political happenings that were going on in Dublin because I’d been in Brussels and Frankfurt.

“When the Taoiseach [Brian Cowen] said, ‘We’re not in

 negotiations’, I took that to be the standard thing, understood by informed people, to say, ‘Oh you’re not in negotiations, you’re in pre-negotiations’.”

The Inquiry report outlines how Mr Cowen commented on the infamous Morning Ireland interview, saying “he did make the point in the interview that this is a matter for the Government and he went on to give an opinion”.

The Inquiry report also outlines Mr Honohan’s view of a letter from ECB boss Jean-Claude Trichet to Mr Lenihan later that month.

The letter instructed Ireland to apply for a bailout and sign up to agree financial reforms with the Troika.

Mr Honohan said that given that Irish officials were already preparing for a bailout application, the letter and other overtures by ECB officials were “gratuitous”.

The report also explains how the role the Central Bank had in promoting financial services was removed by a 2010 law and this was “considered necessary” by Mr Honohan.

Jean Claude Trichet

FORMER European Central Bank president Jean-Claude Trichet left the Irish people saddled with billions of euro of debt by refusing to allow the Government to burn bondholders who invested in the country’s failed banks, the Banking Inquiry found.

The ECB is heavily criticised in the inquiry’s report for its role in the bailout following the collapse of the economy.

The report published yesterday found the ECB put  Ireland “undue pressure” on Ireland in 2008 and effectively forced the country into a bailout programme.

Mr Trichet (inset) was ECB president at the time of the bailout, and the report found financial assistance given to Irish banks would have been cut off if the Government did not enter the Troika bailout.

The report also found the ECB insisted senior bondholders who invested in Ireland’s failed banks should not be forced to bear their fair share of the financial burden during the bailout.

Rather, bondholders received a return on their investment while the taxpayer was forced to take on the bank debt.

The report states: “The ECB position in November 2010 and March 2011 on imposing losses on senior bondholders contributed to the inappropriate placing of significant banking debts on the Irish citizen.”

Mr Trichet also caused headaches for the Banking Inquiry by refusing to appear before a public hearing in Leinster House.

Instead, he insisted he would only answer questions at a neutral venue.

Inquiry members were forced to attend an Institute of International and European Affairs (IIEA) event in the Royal Hospital Kilmainham to speak with him.

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