Honohan's thoughts on the burning financial issues
Published 16/06/2010 | 05:00
Scrutinising the banks' behaviour:
Professor Patrick Honohan said he wanted to know why "so many banks" made exceptions to their lending policies and how banks' bonus structures influenced "bad decision making".
The "best way" to do that would be for each bank to engage external consultants to examine the way their risk management works. "I think it should be done," Prof Honohan said. "If nobody else pursues it, we [the Central Bank] will."
It would have been "better" if the Government hadn't included subordinated debt in the banking guarantee, but it wouldn't have saved the country the €14bn quoted by some commentators, Prof Honohan said.
"You might have saved a bit," he added, "I won't put a number on it because it's still in play."
Dealing with legacy staff:
Asked about how he deals with staff who were in place when the regulatory system failed to rein banks in, Prof Honohan replied: "Cutting off noses to spite faces is not personally what I'd be about."
New staff had been hired and people had been allocated to areas where they would "be effective". "I wouldn't be carrying passengers," he stressed.
Brian Cowen's tenure as Finance Minister:
Outlining the minister's role in regulatory failings, Prof Honohan said: "I think the minister is entitled to assume that the agency he set up to look after prudential regulation will do the job."
Ireland's recession versus the world's:
"The tide is gone out on everybody but our rock is standing up much higher than others," the Central Bank governor said.