We need to know what went wrong in the banks
IT'S long been believed the banks weren't giving the authorities the full picture about their perilous financial position back in 2008.
Thanks to the publication of secret Anglo Irish Bank recordings in this newspaper yesterday, we now know that for a fact.
The flippancy of the conversations between the two Anglo executives is genuinely shocking (if not, perhaps, that surprising given what we've learned of the bank's culture).
The brazen comments about picking the €7bn figure "out of my arse", and the strategy of "pulling in" the State to bail out the bank, while masking the "enormity" of what was actually needed, are galling.
People are understandably outraged at the deception involved. The taxpayers, it would seem, were simply pawns in a high stakes game. The cost of that 'game', as everybody is painfully aware, has run to €64bn, with Anglo accounting for almost half of that total.
The disclosure of the tapes will ramp up the pressure on the Government to instigate an inquiry into the banking collapse.
Many people forget that we have actually had a Commission of Investigation into the banking sector – known as the Nyberg report. Despite being wrongly criticised for pulling punches, it's an excellent, calm analysis of what went wrong.
But for reasons of public confidence alone, the need for a further, wider banking inquiry is probably beyond question at this point. However, the type of inquiry established is critical.
The Government says the inquiry should be handled by an Oireachtas committee. That would be a mistake. Put bluntly, despite having many capable members, neither the Public Accounts Committee nor the Finance Committee has what it takes to get to the root cause of what was a systematic banking crisis.
It's highly questionable, even after the passing of the Houses of the Oireachtas Inquiries, Procedures and Privileges Bill, whether TDs and senators will have the requisite powers to compel witnesses to attend their hearings. And we know, from the Supreme Court judgment on the Abbeylara Oireachtas inquiry, they will be highly restricted in terms of the findings they can make against private citizens.
Perhaps the biggest worry is that it would descend into political point scoring and 'heads on a plate' grand-standing.
If the quality of Dail debate over the past five years is anything to go by, all the focus would be the night of the bank guarantee.
This near obsession with 'what really happened on 29 September, 2008,' is a massive over-simplification of a crisis that was caused long before that date.
Politics being politics, the evidence of the likes of Brian Cowen and Bertie Ahern would inevitably dominate proceedings. Of course, they are important to any inquiry but they cannot provide anything like the complete picture.
Any investigation has to dig far deeper than that. For example, does anybody really believe that, if the Irish Independent hadn't revealed the Anglo tapes, John Bowe and Peter Fitzgerald would have been called as witnesses to an Oireachtas inquiry?
Yet, it is the likes of Bowe, Fitzgerald and perhaps hundreds of other senior and mid-ranking managers across all the banks that will be so crucial to providing comprehensive answers to what went wrong between 2002 and 2008. During that period the banks embarked – unchecked – on an orgy of reckless lending.
That lending, and the failure of the authorities to regulate it, is at the root of the crisis.
We need to ask ourselves a serious question in relation to any banking inquiry. Do we want headline grabbing 'walks of shame' and emotive grilling of the central characters? Or do we want to forensically get to the bottom of what happened and ensure the appalling mistakes made never happen again?
An Oireachtas committee inquiry can only tick one of those boxes – the wrong one. There must be a better way.
Shane Coleman is Political Editor of Newstalk 106-108FM