Regulator condemned over banking crisis
The Financial Regulator's handling of the banking crisis was late and insufficient, a Government watchdog said today.
The report from John Buckley, the Comptroller and Auditor General (C&AG), found shortcomings in the way experts oversaw dealings in finance houses in Ireland, Europe and around the world.
In a bid to improve control and keep a closer eye on operations, Mr Buckley said the regulator should make an annual statement on its supervisory work to the Dail.
Finance Minister Brian Lenihan welcomed the C&AG's report and said important legislation to reform the Central Bank and Financial Services Authority of Ireland will be published this week.
"This is the first of a three stage legislative programme to create a new fully-integrated structure for financial regulation, enhance the powers and functions of the Central Bank and consolidate existing legislation," the minister said.
The C&AG's report set out the steps taken to ease pressure on the financial sector since the banking crash of 2008, including the €11bn recapitalising Bank of Ireland, AIB and Anglo-Irish, new rules on directors' loans and increasing the workload of the regulator.
The report said: "The regulator has acknowledged that, in retrospect, the actions it took were insufficient and were not taken early enough.
"It stated that it took what it considered to be proportionate actions to mitigate the risks in the system but that this was not enough as the scale and rapidity of the crisis (which was exacerbated by events such as the Lehman's collapse) greatly exceeded forecasts."
It also stated: "Considerable work remains in order to ensure that future shocks can be effectively addressed by "fit for purpose" crisis management characterised at international level by co-ordination rather than competition."
Fine Gael finance spokesman Richard Bruton said the C&AG should claim some credit for warning about inadequate supervision in 2007.
"Ireland must never again be exposed to the risk-taking which brought such destruction on the lives of many ordinary people," he said.
"The Fianna Fail/Green Government seems determined to save the blushes of prominent people, including themselves, in any investigation which takes place. That is simply not good enough."
Joan Burton, Labour's finance spokeswoman, said the report showed there was ample knowledge within the Financial Regulator to be able to prevent or at least mitigate the banking crisis.
"Ireland needs a return to robust regulation of the financial sector, and probity must be our new watchword," she said.
"We need regulation that is both tougher and smarter. We need to restore trust and integrity to Irish banking and finance."