Maeve Dineen: Bank crisis inquiry will fail if it does not name and shame
Published 31/05/2010 | 05:00
THE battle against the financial crisis may be easing slightly but the hand-to-hand fighting over why it happened has barely begun.
The first stab at settling the story begins this week when two reports looking at Ireland's banking crisis, one by former IMF officials Klaus Regling and Max Watson and another by Central Bank governor Patrick Honohan, are presented to the Minister for Finance and then to the Cabinet.
Regling and Watson have questioned a large number of bankers and financial experts on whether the wrong kind of incentives were given to the commercial property and residential housing markets in the years leading up to the property crash, which started in 2007. Their findings are expected to detail how tax breaks provided to sections of the property industry distorted the overall market. They are also expected to conclude that several senior bankers in the country had far too much power and made a number of fundamental errors in relation to the funding of property deals.
Mr Honohan, on the other hand, has the unenviable task of looking at the performance of the Central Bank and the Financial Regulator and could well end up criticising the work practices of some of those with whom he now works in the Central Bank.
But before we all get carried away, the reports due out this week will fall well short of naming and shaming those directly responsible for our current financial mess.
They will simply form the terms of reference for the commission and the basis for round two of the inquiry which will involve the establishment of a statutory commission of investigation.
Many people will pay little attention to the reports. But one of the oldest tricks in the book is to set the terms of reference in such a way that they will prevent anything of consequence coming out. The wider public may be indifferent to the terms of reference, but the civil servants and politicians will be thinking of little else.
Some will question the point of an inquiry.
The money is gone. We all know who was guilty. We'll have inquiry statements, court findings, government statements and rulings. But any fool could draw up a 40-strong rogues' gallery of developers, executives, auditors, regulators and perhaps even the tea ladies who overdosed directors on extra tea and coffee.
But this banking inquiry is not just a prerequisite to restoring public confidence in the banking system. Ensuring public acceptance for the bank guarantee and for NAMA has always been premised on a public expectation that there would, at some stage, be a detailed exploration of the causes of the banking crisis and first blood not just drawn, but delivered.
While an in-depth banking inquiry is both necessary and inevitable, it will only work if it offers credible answers to the taxpayers who are bailing out the banks.
We can't end up with an inquiry that blames everyone yet "finds fault" with none.