IT was one of those defining moments. I gasped when I heard the news. AIB, the barely breathing corpse of Irish banking, had seen the light. The board of the zombie bank had suffered a deathbed repentance. The country could yet be saved.
Last week, the news seeped through that AIB had appointed Thomas Foley to the board. I used to know Thomas Foley a little. The former US ambassador to Ireland was an ideal choice. He carried none of the normal, but fatally flawed, banking baggage borne by other nominees to Ireland's bank boards.
AIB desperately needed an energetic American, an outsider with a business pedigree. Foley had been respected and popular during his short stint at the US embassy here. In 2009, he had returned to the US and got married.
We thought that his return home would be the last we would see of the US businessman. But no, AIB had done a good day's work by enticing him back.
Foley had the right credentials. A successful businessman, he had worked in the prestigious McKinseys, was the proud holder of a Harvard Business School MBA and had been employed by Citicorp Venture Capital. Bravo. Hats off to AIB.
As an afterthought, I decided to read the press release from AIB. My heart sank. It told us that Thomas Foley was a chartered accountant. Although that is not yet a sin, it is a bad start! It said that he was a former chief executive of KBC Mortgage Bank (formerly IIB); that he had been a member of the controversial Nyberg Commission investigating Ireland's banks; that he had been a senior executive at Ulster Investment Bank; and that he had benefited from several assignments from the dreaded Department of Finance.
The penny dropped. Thomas Foley, the former ambassador -- a perfect candidate as a director of AIB -- was sticking to the Land of the Free. The real Thomas Foley was yet another insider, deeply embedded in Ireland's banking culture. The Department of Finance and the board of AIB had lived up to expectations.
The AIB press release presented all the bald facts about its new appointee. Predictably, it failed to fill in the gaps.
Who is the real Thomas Foley, AIB director? Is he yet another one of the old guard, or has he something special to offer?
Apologists for Thomas's appointment would probably put forward his expertise in the mortgage market as a primary reason for his selection. After all, his skill sets are on the button because last week it became increasingly obvious that Ireland's mortgage mayhem was mushrooming.
A new grenade was lurking deep in the foundations of the pillar banks. Last Thursday, Moody's rating agency reviewed Ireland's mortgage mess. Its findings: one in five borrowers will be in default next year.
What a wonderful time for AIB to recruit Thomas. He knows a lot about the mortgage crisis. He helped to create it. What the AIB puff, the press release, did not tell us was that he scored some significant own goals when he was head of mortgages at KBC. It was foot in mouth stuff. Foley's folly.
Thomas was a bull of Irish mortgages in 2005. As the property market soared away in a frenzy of uncontrolled lending, Thomas Foley was calm as a cucumber. At an IIB/KBC seminar in September 2005, he spoke glowingly of the market's prospects.
He recklessly forecast that the "outlook for the Irish property market remains very encouraging with three supportive factors likely to play critical roles in the next year or two. Not only does it seem that borrowing costs will remain lower for longer, but migration is boosting demand for housing in Ireland by far more than might have been expected. It also seems that maturing SSIAs will have a marked impact on the property market."
So KBC went gangbusters on mortgages.
Not seeing a cloud on the horizon, the bold Thomas went on to assure his audience that "these positive drivers" were being met by much increased construction levels.
And then -- the smug little gem from yesterday's superbull: "The market as a whole," he declared, "is still dominated by sensible borrowing and lending practices. As a result, we're not seeing the proliferation of exotic and occasionally risky mass market products that are becoming more commonplace in markets such as the US."
Wow. Quite a hostage to fortune.
Such derisory remarks about "risky mass market products that are becoming more commonplace in markets such as the US" did not stop KBC, under the loquacious Thomas, entering into a joint venture into a rather "risky" product with a rather well-known US bank.
The very next year, in 2006, KBC joined forces with a US bank with the rather familiar name of Lehmans to promote rather infamous products called sub-prime mortgages in Ireland.
Stepstone Mortgages was born, the child of Lehmans and KBC. It lent money to Irish borrowers already in arrears, to self-employed without good credit records and to other high-risk categories.
Stepstone Mortgages was a short-lived disaster area. It closed its doors to new business in 2008. Today, the Irish courts are seeing some of the results of its lending activities. Stepstone is busy repossessing houses from borrowers to whom it lent money in the barmy property frenzy.
Last April, Stepstone was severely criticised by Mr Justice Brian McGovern, claiming that it had been lending at "exorbitant rates of interest". He said that Stepstone had given "false hope" to a Galway couple of 61 and 55 when lending them €120,000.
The couple's counsel insisted that the mortgage was unsustainable on the day it was granted, that the interest rate was eight per cent and the only income they enjoyed was from taxi driving. The order to repossess was granted with a stay of execution of nine months.
Sub-prime mortgages helped to sink Lehmans. They did not sink Foley. He retired from KBC in 2009 -- but like all Irish ex-bankers, he was not idle for long.
He was soon commissioned by none other than the Irish Banking Federation (IBF) -- the banking insiders' lobby group -- to explore various options with Irish lenders to provide additional solutions to mortgage holders who are in arrears. Did he suggest a bit more sub-prime?
In the same year, he popped up -- along with IBF chief Pat Farrell -- as representing the same IBF on the Interdepartmental Group on mortgage arrears. Not only does the IBF love him but the Department of Finance has showered him with gigs.
The combination of the two bodies is the same lethal cocktail that sank Ireland.
A few months later, Thomas was made a member of the Nyberg Commission, reporting into the Irish banking crisis. Nyberg's report pulled its punches. Foley's patrons among the mandarin and banking classes salivated after the report was released.
So, fool that I was, I thought AIB had been inspired and appointed the right Thomas Foley. I should have known.
A few months ago, Bank of Ireland appointed another insider, Archie Kane, as governor. It didn't seem to matter a damn that Archie had lost part of his bonus at Lloyds after forced write-offs following the Payment Protection Insurance scandal.
So why would AIB not appoint another insider, a favourite of the mandarins, whose own bank had fuelled the property crisis and championed the sub-prime disaster?