Watchdog tells Quinn: Show me the money
Regulator talks tough on banks, stock exchange and predecessor
THE country's financial regulator yesterday threw down the gauntlet to tycoon Sean Quinn: come up with the cash to plug the hole in your books or lose control of your empire.
In an extraordinarily frank public challenge, Matthew Elderfield told Ireland's former richest man: "Show me the money."
Quinn Insurance refused to respond last night but it is understood the company's only hope of getting fresh money and averting full administration is through Anglo Irish Bank.
But the regulator remains cold on this plan despite some recent changes to it. Yesterday Mr Elderfield also laid bare the disastrous state of financial regulation he inherited from his predecessor Patrick Neary.
Attempts to contact Mr Neary were unsuccessful last night.
Mr Elderfield outlined how just two people were regulating two of the biggest financial institutions before the crisis began.
He also gave the Stock Exchange a tongue-lashing for failing to help investors who believe they have been ripped off by stockbrokers in the past decade. And he forecast that more crippling mortgage rate rises are on the way.
Mr Elderfield also said banks had given too much power to "over-dominant'' chief executives. He said rates were too low in previous years as banks chased "unsustainable profits''.
Under pressure from some members of the Oireachtas Committee on Economic and Regulatory Affairs, he made no apologies for putting an administrator into Quinn Insurance.
"My statutory responsibility is to the 1.3 million policy holders; I have to get a result for them," he said.
However, he flatly rejected any idea of giving Quinn Insurance time to fix its balance sheet and improve its solvency levels.
"We don't give favours," he said, adding that other insurance companies had to adhere to the standards Quinn could not meet.
Mr Elderfield accused Quinn Insurance of persistently breaching insurance rules and told the members there was a "history" to the current situation.
He also voiced concerns about a plan by Anglo Irish to take over the Quinn Group, saying he needed to be "assured" Anglo had the expertise and corporate governance standards. The new regulator, who has shaken up the financial services industry, is now looking for 150 new staff this year and several hundred in the period ahead.
"Our resources are far below what is required to supervise the number of firms within our responsibility," he said.
Mr Elderfield said the Financial Regulator was now interviewing new directors going on to bank boards to see if they were suitable.
He said he was even prepared in future to tell bank directors and chairmen if they weren't up to the job.
The tough-talking regulator also attacked the Irish Stock Exchange, saying it needed to step "up to the plate" and probe complaints about stockbrokers filed by members of the public.
He also revealed that Bank of Ireland should be able to keep government control below 50pc, but refused to comment on what might happen at AIB.
Meanwhile, President Mary McAleese yesterday said the present economic situation was "pretty much testosterone-driven". The country was still living with the downstream of consequence, she said.
As the regulator spoke, Quinn Insurance staff were considering plans for a massive rally outside his office tomorrow despite the insurer's administrator warning them not to put the watchdog under "undue pressure".
Quinn's staff group announced the rally yesterday morning as part of their campaign to compel the regulator to lift his ban on Quinn writing new policies in the UK and Northern Ireland.
The workers claim the ban is costing the insurer between €1m and €1.5m in new premiums every day