'Banks have no sense of guilt', warns former EBS board member Tinney
A former member of the board of EBS has warned that banks have "no sense of guilt about what they have done" and "if left unchecked they will do it all over again".
Ethna Tinney, an independent, former non-executive member of the board, also criticised the bank guarantee as "indefensible" and said senior management at EBS were "taken in by Ireland's so-called developers".
Ms Tinney was one of three EBS executives who addressed the Banking Inquiry yesterday.
Former finance director at the society, Alan Merriman, defended bonuses of €309,000 and €220,000 in 2007 and 2008, saying: "I would have needed that money to cover my obligations."
On the bank guarantee, Ms Tinney said it was "indefensible for the Government in September, 2008, to in effect yield the sovereignty of this country in order to shore up a banking system that is entirely of and for itself and will never change".
Ms Tinney accepted, however, that "many grave problems would have arisen if one or more banks had failed and that the full extent of bad debts were not known at the time".
Referring to senior management being taken in by developers, she said board members, including herself, were also taken in.
Although EBS had been "cautious about joining the bandwagon", they emulated their peers.
"There was a sort of feeding frenzy as the banks clambered over one another to get a piece of the action, especially as new foreign banks had entered the market as competitors," she said.
Ms Tinney's view of the bonus system within banks was that it was "crazy".
"You get a bonus for lending money out. There is no incentive to get it back in. Such a system encourages greed and recklessness."
Fidelma Clarke, former chief risk officer at EBS, said: "Clearly and very regretfully the level of risk undertaken by the society increased in parallel with the boom period".
The control structure in place to mitigate risk "transpired to be insufficient", she added.