Fianna Fail economic policy 'at heart of banking crisis'
Fianna Fail's stimulation of the economy by way of tax breaks, weak governance in the banks and poor regulatory supervision within the Central Bank lay at the heart of Ireland's banking crisis.
That is according to the advisory team to the Oireachtas Banking Inquiry, who made the comments in "strictly private and confidential" documents seen by the Irish Independent.
The 24-page advisory document examined the previously conducted reports into the banking crash.
The much-anticipated €5m inquiry team is meeting in private this morning to begin finalising its agenda before it is due to commence its public hearings next week.
The inquiry's advisory team - Karl Whelan, Dr Pat McCloughan and Jim Devlin - last week presented three separate documents to the members. Firstly, the 11-man inquiry received a detailed chronology of the banking crash, charting events from 1992 until the end of 2013. They also received an 11-page guide as to how banking systems work.
Finally, they received a detailed analysis of four separate reports already completed into the banking crisis. These were the 2009 Regling and Watson report which looked at the role of markets, policies and institutions and the 2010 Honohan report which looked at crisis prevention and crisis containment.
They also looked at the 2011 Nyberg Report, which examined the herd instinct within the bailed-out banks, and finally the Wright Commission report into the failures of the Department of Finance.
Within their analysis of the Regling and Watson report, the advisory team added their thoughts as to the home made factors that contributed to the crisis. They single out the tax policies of the then Fianna Fail Government as a "particularly significant aspect of fiscal policy underpinning the genesis of the banking crisis".
"The Government was naturally enough primarily responsible for the pro-cyclical fiscal policy; the banks themselves primarily in respect of the weak governance and risk management within their institutions; the Financial Regulator and the Central Bank for the weak regulatory supervision and the Central Bank for the inadequacy of the financial stability system at the time," the documents states.
The advisory team proposes that each and every one of the recommendations made in the Wright Report into the Department of Finance "should be examined in terms of the extent to which they have been implemented to date".
The advisory team recommends that the Secretaries General at the Department of Finance and Public Expenditure and Reform, Derek Moran and Robert Watt, detail how each of the Wright recommendations have been dealt with.
The 24-page document also says Central Bank Governor Patrick Honohan "contradicted himself" in his report and said the inquiry should discuss this with Honohan when he comes in. The report explores the domestic and international events that led to the introduction of the September 2008 Bank Guarantee.
At its meeting today, the inquiry is to receive a "technical briefing" from Dr Whelan and the advisory group.