Banking inquiry is just a political blame game
It would be a far better exercise to find ways of making sure the crisis doesn't happen again.
READERS of a certain age will remember that the BBC used to have a light-hearted programme called That's Life! hosted by a likable woman called Esther Rantzen.
That's Life! had many faults but its saving grace was that it did not take itself too seriously. Amid features on talented cats and the like, Rantzen ran effective campaigns on anything from personal finance issues to seat belts for children – and got the law changed as a result.
It was just the sort of programme that, had it been made in Ireland, would have casually revealed what was happening when banks were colluding with customers to avoid paying DIRT tax back in the 1980s and 1990s.
Instead, we got the Public Accounts Committee's drawn-out investigation, which went on for months before finally telling us what we already knew thanks to a previous report on the same topic by the Comptroller and Auditor General.
That the PAC's investigation into the DIRT tax is generally held to have been the committee's finest hour is a sign of just how ineffectual the entire Oireachtas committee system is.
With this in mind, why would anybody believe that the proposed banking inquiry will get to the bottom of this country's financial collapse? Where is the track record when it comes to sensible inquiries with worthwhile conclusions?
So far, the omens have been bad. Leaving aside all the recent nonsense about procedure and committee majorities, we have seen people excluded from the committee for expressing views on the banking crisis over the past few years. This is patently absurd. How could anybody over the age of 15 who is not brain dead fail to have a view on what the financial sector has done to this country?
The omens are no better when it comes to the next few months. The committee will present a plan of sorts to the Committee on Procedure and Privileges and then look for approval when the Dail finally trundles back to life in the autumn.
It will then begin oral hearings in the spring and finally get round to publishing the final report in around 15 months' time. That's longer than it took the British and Americans to fight their way from the Normandy landings to Berlin. But then, the British and American forces did not take two long holidays.
This incredible delay would be unforgivable at the best of times but it is almost insane when one considers that the inquiry will collapse if the Coalition falls. A Government that was really interested in uncovering the origins of the crisis would ensure that the mechanism employed to uncover the truth did not depend on the whims of a few backbenchers.
What is perhaps most annoying about this charade is that we have already had three inconclusive reports on the financial crisis. Honohan, Watson, Regling, Nyberg; all of these worthies have looked at aspects of the crisis and come up with anodyne conclusions that could be summarised as; 'you all partied but the banks and regulators got completely slaughtered'.
This is not to criticise Messers Honohan, Watson, Regling, Nyberg; the origins of the financial crisis are about as varied and obscure as the origins of World War I, another entirely pointless waste that could have been postponed but was probably inevitable.
The greatest economists and financiers of our age are completely divided on the origins of the financial crisis so it is quite a stretch to believe the banking inquiry could, or indeed should, be able to reach a unanimous conclusion on the vexed question of blame.
A much more useful and interesting exercise would be to try to draw some conclusions from the crisis to prevent something similar happening again.
That would, of course, require our politicians to engage in creative thought rather than playing the blame game to which all politicians become addicted during their spells in opposition.
It is not possible to foresee every trigger of a financial crisis but there are undoubtedly interesting questions that would be worth considering.
Ireland's banking crisis was essentially due to groupthink among a few banks that were too big to fail. One question a real banking inquiry would address is why we have since reduced the number of players in the market and made groupthink even more probable?
In the Great Depression era, US senators and congressmen passed the Glass–Steagall Act, which limited commercial bank activities and prevented the creation of mega banks for just this reason. The laws were slowly repealed in the 1960s and finally killed off by Bill Clinton in the 1990s, which in turn led to a repeat of the 1930s.
The odd show trial is undoubtedly amusing. It may even lift the public's spirit to see the local actors in the global financial crisis humiliated but it will do nothing to prevent the next disaster. This Government has shown little inclination to draw any lessons from the crisis and reform the banking sector when it is in need of wholesale reform.
An ineffectual inquiry, that may not even see the light of day, is a missed opportunity and a luxury we cannot afford.
What we do next is more important than what we did.
Thomas Molloy is Group Business Editor