Donal O’Donovan: Change of tack with lenders has been long overdue
THE Government is finally running out of patience with the bailed-out lenders.
The robust views delivered at yesterday's banking conference echoed last week's speech by Taoiseach Enda Kenny, when he told those attending the Dublin Chamber of Commerce annual dinner that AIB and Bank of Ireland were not doing enough for business banking.
The attack by Fiona Muldoon of the Central Bank and John Moran of the Department of Finance is the latest evidence of the new departure.
It's a change of tack for policy-makers who, up to recently, were keen to stress the success of last year's bank restructurings, and the restoration of AIB and Bank of Ireland as "pillar banks".
That is now over.
Those bank restructurings stopped some of the rot, in particular ending the damaging loss of deposits. But there has been little or no impact on confidence and cash flow in the wider domestic economy.
Banks have not helped themselves in any of this. The sluggish response to mounting mortgage arrears and the lack of transparency around lending to small and medium-sized business helped to drive the latest wedge between bank supervisors and the lenders.
It's also no coincidence that this week's high profile drubbing comes as officials from the EU/IMF returned to Dublin for the latest "troika" review.
In little more that a year the troika has seen a radical transformation of major aspects of Ireland's economy, with rising exports, a surge in foreign investment and the Government's return to borrowing on the markets.
Despite it all, spending inside Ireland, the real lifeblood of the economy remains hamstrung by high unemployment, the economy is clogged up with bad debt, and there is no end to the crisis of consumer and business confidence.
The flow of credit is vital to getting things moving on the home front, and so too is facing up to the reality that "debts that can't be repaid, won't be repaid".
It's where the restructured banks were supposed to come in. It hasn't happened, and the wonder is it took this long for anyone to notice.