Friday 9 December 2016

Fianna Fail made some mistakes, but I didn't: Cowen

Published 14/05/2010 | 05:00

TAOISEACH Brian Cowen last night admitted for the first time that Fianna Fail governments had made mistakes that contributed to the banking collapse and economic crisis."

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But at no point during a speech on the banking crisis did Mr Cowen say he personally had made mistakes -- maintaining instead that he had tried to curb the property boom while Finance Minister.

In what was billed as a major speech as part of the Taoiseach's new communications strategy, Mr Cowen told the North Dublin Chamber of Commerce it would be wrong not to admit that mistakes made at home had contributed to the collapse.

He said the Government "shares responsibility for its role in these mistakes".

The Taoiseach added: "Governments must never again intervene in property markets, via tax incentives or other measures, to a degree which may make possible property bubbles.

"There was a failure to implement more intensive compliance regulation of those financial institutions which were too big to fail.

"I believe that auditors, regulators and governments all share part of this responsibility."

Fine Gael finance spokesman Richard Bruton said Mr Cowen's speech read like "a sad attempt to pre-empt the findings of the preliminary banking inquiry".

Mr Bruton added: "The Taoiseach is fooling nobody if he thinks that catastrophic mistakes were not made during his time as Minister for Finance."

Mr Cowen's comments came as the Financial Regulator Matthew Elderfield unveiled tough rules aimed at forcing banks to disclose the loans they give to their own directors.

Appearing before the Dail's Public Accounts Committee, Mr Elderfield also pledged to clean up the Irish banking system by tackling what he described as an "unholy trinity of bad rules, bad behaviour and bad attitude".

Mr Cowen's speech was a change from his usual message that only international factors were behind the banking crisis.

"Certainly, international factors were a critical component in the crisis, but it would be wrong for us not to accept that the crisis was made worse for Ireland because of internal factors," Mr Cowen said at the event in Dublin City University.

"The reality is that there were domestic vulnerabilities and when Ireland was confronted with the global crisis, these led to the near collapse of the banking system."

He said that, as Finance Minister, he had believed that there would be a soft economic landing, the banks had sufficient capital and property prices would stabilise gradually.

Overvaluation

"However, the overvaluation of properties and related vulnerabilities within the banks put Ireland in a weaker position."

He said property-based tax incentives should have been abolished much sooner than they were and added that he had resisted the "clarion call" to abolish stamp duty.

"There were property tax incentives in place over the period from the mid-1990s which, with the benefit of hindsight now, should have been abolished many years prior to my decision in December 2005 to abolish these incentives," Mr Cowen said.

"I was concerned about the potential vulnerabilities and risks arising from the rapid escalation in property prices, which was a recurring theme in risk assessments.

"It has since been alleged that no action was taken by the Government to deal with these risks. This is simply not true."

Mr Cowen said the current government strategy was aimed at getting credit flowing again to small and medium businesses, but admitted the banks were not lending as they should.

"Our position is simple: if the banks are not working for SMEs, then it is our responsibility as a Government to make sure that they do."

Irish Independent

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