What today's 'Financial Times' is saying about our bankers
Published 09/11/2012 | 05:00
Ireland's bankers have not covered themselves in glory in recent years. The credit binge they presided over felled the country's largest lenders and saddled taxpayers with a €64bn debt.
As the Irish people have been paying heavily for this ever since, in the form of fierce austerity and plummeting real wages, one can understand why pressure has risen for those who presided over the mess to share a little of the pain.
This week, Allied Irish Banks, one of Ireland's nationalised banks, duly wrote to more than 15 of its former directors asking them voluntarily to forgo part of their pensions.
It is debatable whether the generous savings those bank executives built up during the fat years were truly earned, given the cataclysm that followed.
What is unarguable is the fact that after the rescue the Irish government had to slash spending on both its current and future pensions. Those who helped to dock the retirement income of others can hardly complain if they are asked to take a hit.
So far, however, the bank directors' reaction has been underwhelming. One former manager -- Eugene Sheehy, who used to run AIB -- has said that he will reduce his payments by a fifth, a smaller concession than the Royal Bank of Scotland's Mr Goodwin's, who was asked to forgo a third of his pension three years ago. The others have yet to respond publicly.
Public shaming may be the only recourse available to the government. Some argue that the pension funds should stop paying these executives, daring them to sue. Alternatively, Dublin could raise a levy on the richest pensions. But, however justified the resentment, either step would be wrong.
Governments should not tear up contracts or tweak laws just to target a few. If the directors are to be penalised for their acts, this should happen in the civil courts.
Mr Sheehy and his colleagues should think long and hard about their response, however. Ireland is a small country; their moral debts are huge.
While a pension cut may not be enough to salvage their honour, failure to act will guarantee their status as pariahs.