No high level Gov't discussions on bank regulation problems prior to guarantee - ex Tanaiste Mary Coughlan
Former Tanaiste Mary Coughlan said there was no discussion of problems with bank regulation at the highest level of Government in the period before the bank guarantee in September 2008.
The long time Donegal TD and minister said in a written statement to the Banking Inquiry published today.
Mary Coughlan was a senior member of Cabinet at the time of the banking crisis. Her written evidence was published along with statements from almost 20 witnesses who have not been asked to attend the Inquiry hearings in person.
“It is my recollection that, prior to September 2008, during my time as a member of the Government no concerns were expressed within Government regarding the strength or quality of regulation of the financial sector in Ireland,” the former Tanaiste said.
After September 2008, the time of the now controversial bank guarantee, it became evident that changes to the regulatory structure that had been introduced back in 2002 had proved “not fit for purpose,” the long time Donegal TD and minister said.
In her evidence, Niamh Brennan, an academic expert on corporate governance at UCD who served as a director of Ulster Bank from 2001 to 2009, said she and the rest of the board did not know how much their bank’s own chief executive was paid before 2009.
Executive pay, and other issues including lending policy were decided by RBS in the UK, not the Ulster Bank board, she said.
She was aware of mortgage lending that was done outside Ulster Bank’s own guidelines in the period, and that the issue was raised by the board with the bank’s managers, she said.
She said she believes pressure on Ulster Bank to grow its business came primarily from the bank’s parent RBS and its then chief executive Fred Godwin in the run up to the crash, not from the lender’s peers in Ireland.
Since the financial crash RBS has spent around £15bn propping up Ulster Bank, proportionately one of the biggest bailouts of any lender here.
In her written evidence, journalist and writer Deirdre Purcell said she was surprised in 2002 to be asked to sit on the board of the then new Financial Services Regulatory Authority (FSRA) by then minister Charlie McCreevy.
She joined the board of the Financial Regulator as an “ordinary consumer” and in her time focused on consumer protection and the credit union sector. In hindsight greater emphasis should have been laid on bank supervision, she said.
Despite warnings including from economist Morgan Kelly that a crash was on the way the board of the regulator was, incorrectly , convinced by then more widespread arguments that the property boom was facing a so called “soft landing” she said.