Central Bank's board queries its response to Banking Inquiry
The board of directors overseeing the Central Bank has questioned its proposed response to the damning findings of the Banking Inquiry.
The Commission, or board, that oversees the Central Bank of Ireland is made up mainly of outsiders including the Secretary General of the Department of Finance, Derek Moran, and the former head of the Economic and Social Research Institute (ESRI) John Fitzgerald, along with the bank's own most senior officials like Governor Philip Lane.
The Commission pushed officials at the bank to come up with a less technical and less narrow response to question marks raised over the bank's work in the period before the crash, at a meeting February.
The Central Bank Commission held its regular monthly meeting on February 25, where the response to the Banking Inquiry was just one of a number of items on the agenda, according to minutes of the event published yesterday.
Other issues raised included insurance and the high cost of Irish mortgages, the minutes show.
In January this year the report of the all-party Oireachtas Banking Inquiry into the crash included sharp criticism of regulators among its key findings.
A lack of action during the boom directly contributed to the scale of the crisis, according to the report. The Banking Inquiry found that both the Central Bank and Financial Regulator were aware as early as 2003 that Irish banks had become increasingly reliant on the property sector, but failed to intervene decisively.
The inaction of supervisors meant lenders were allowed to breach lending limits on property with impunity, the report found.
And it found there was also no evidence that the Central Bank had any robust research or analysis to back up its assertion that there would be a "soft landing" in the property market.
A summary of the Central Bank staff's response to some of the recommendations in the report was provided to the Commission at the February meeting, along with drafts of letters prepared for both the Department of Finance and the European Central Bank on foot of the Inquiry findings.
It appears however that a number of members of the Commission were not satisfied by the response to the Banking Inquiry - including on the basis that it was too narrow and too technical.
"In the discussion that followed, a number of members noted that the staff response was technical in nature and, while this satisfied the particular purpose, the need for a separate and broader overview of issues arising from the Banking Inquiry and previous related reports on the crisis would be useful," the meeting minutes state.
The record does not say which or how many members of the Commission raised concerns.
It does show that some amendments to the letters addressed to the Department of Finance and the ECB were also suggested at the meeting.
Central Bank Governor Philip Lane said that the Commission would return to the response to the Inquiry at a later date.