Wednesday 7 December 2016

Hurley turns the heat up on Trichet and Neary

Published 22/05/2015 | 02:30

Former Minister for Finance Brian Lenihan
Former Minister for Finance Brian Lenihan

So who do you think you were kidding, Mr Trichet? Three weeks ago in a very unsatisfactory forum, the ex-President of the European Central Bank Jean Claude Trichet "engaged" with members of the Oireachtas Banking Inquiry.

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Having refused to appear at the inquiry properly, and most importantly under oath, he repeatedly rejected claims that he ordered the late Brian Lenihan to "save your banks at all costs".

Lenihan, while still Finance Minister, made public comments that Trichet phoned him on the weekend of September 20 2008, days after the collapse of Lehman Brothers, with the diktat.

The message was that Trichet was not willing to countenance a European repeat of Lehmans.

Throughout more than seven hours of evidence yesterday, former Central Bank Governor John Hurley put paid to Mr Trichet's comments in emphatic terms in response to questions from Fianna Fáil's Michael McGrath.

Hurley said that no overruling took place in his presence in respect of the size, shape and scope of the guarantee.

This is in direct conflict with evidence given by his successor and the now outgoing Governor, Patrick Honohan, that Taoiseach Brian Cowen overruled his finance minister Brian Lenihan.

A strong advocate of the controversial guarantee, Hurley told the inquiry that if the bank guarantee was not put in place the banking system would have become unstable.

But where Hurley was less confident and assured was on the failure of the Central Bank to properly see the crisis develop from 2005 onwards. "We did not see the crisis coming ... we should have escalated our warnings at the time," he was forced to concede.

Hurley, who retired on an annual pension of €175,000 a year, also sought to spread the blame for failing to see Ireland's worst ever financial crash far and wide.

It was the Government's fault for splitting up the roles of the Central Bank and the Financial Regulator. It was the regulator's fault for not keeping a closer eye on the lending practices of the Irish Banks. It was the fault of the international financial crisis which engulfed Ireland.

He dumped particularly heavily on the then-Financial Regulator Patrick Neary for failing to monitor or contain the vast expansion in property lending in the banks.

The much-maligned Neary will have his chance to respond to such charges when he appears before the inquiry on Thursday.

His testimony has left the inquiry and the public with some answers into what happened, particularly on the night of the guarantee.

However, the new conflicts in evidence on several fronts leave the inquiry with some work to do.

Analysis

Irish Independent

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