Bank Inquiry more calamity and chaos than conspiracy
It was hamstrung from the start, but insights into the crash could help us to avoid future crises, says Richard Curran
There is a very easy straight-line logic that says the Banking Inquiry made no substantially new findings and was therefore a waste of several million euro.
It's a good easy soundbyte (the best ones are), that is so simple and clear it is almost 'Trumpesque'.
In reality, there needed to be an official public inquiry into how we ended up spending €63bn to save private sector banks.
Previous investigations had been insightful but confidential. Nobody was even named, never mind asked to give an on-the-record explanation of what happened. Previous investigations were also more limited in their terms of reference.
For the first time, the public, who have taken all of the financial pain of the banking crash, were given some explanation from the main players. We didn't get all of the answers from all of the players.
It was a deeply flawed process, conducted by politicians instead of experts, legally restricted and effectively neutered in the power of its conclusions.
But it has been a worthwhile exercise. It reminded us that ours was a home-made banking problem caused by banks, failed regulation and poor economic policies.
It shed some new light on the events around the night of the State bank guarantee, such as the fact a guarantee had been considered for eight months beforehand.
It paints a picture of guarantee-night discussions which were as much about calamity and chaos, as they were about collusion and conspiracy.
Nevertheless, questions will always remain about the lack of paperwork, the motivating forces behind such a wide and deep bank guarantee and of course, what might have happened had things been done differently.
Among the new information is the fact that former European Central Bank (ECB) president Jean-Claude Trichet warned Michael Noonan about the implications of burning bondholders in 2011.
The National Treasury Management Agency (NTMA) estimated that such a move could have saved the State €9bn. It even went as far as to say the bond market was expecting it and had even priced in burden-sharing with subordinate and senior debt.
Noonan was placed in a very difficult position. Ignore the warning, which the inquiry concluded was a threat from Trichet, and see what might happen, or back down, and be denied of a €9bn saving.
Saving €9bn would have been very handy and the State could have done a lot with the money. But it has to be put in the context of our overall national debt.
Our debt might be €191bn instead of €200bn. It would have cost us any limited negotiating power we had on the promissory notes, interest rates applied to the bailout billions, and the extension of repayment of the loans.
Back in 2010, the Government appeared to be bounced into the Troika bailout when the ECB gave similar warnings about the emergency funding it was providing to our banks.
It is a misnomer to suggest that Trichet and the ECB forced us into a bailout.
We were heading that way anyway, especially from the moment the yield on our ten-year debt went above 6pc a few months earlier.
This is widely seen as the point of no return.
Trichet's posturing undermined our negotiating position, which was already weak. We were badly treated but should not lose sight of perspective in apportioning blame for our difficulties.
Unfortunately, when it comes to Mr Trichet, our national debt and our relationship with the EU, we are where we are.
What matters most now is the future. Have we learned enough from the crash experience to ensure it doesn't happen again?
The Banking Inquiry report has numerous recommendations. Some are sensible, if not a little obvious. It wants to ensure that people on bank boards and in the Central Bank are suitably qualified.
It's a good idea but not the core of the problem. It wasn't a lack of qualifications that prompted bankers to drive their businesses over a cliff, as highly-paid non-executive directors sat in the back seat and said nothing.
It was the culture of the organisations. They needed important people, like board members, to ask difficult questions. That is a matter of personality, insight and character, not qualifications.
I can't say with any certainty that a more questioning culture has emerged in the banking and regulatory system, the Department of Finance or Government Buildings.
We might complain now that banks are not lending enough money and they seem to be a lot more prudent. But in reality, they are still re-building after the crash.
It is too soon for the same mistakes to be made again. It takes 12 or 15 years for people to forget what happened, or how it happened, and convince themselves that this time it is different.
So it is far too early to assess how much the bankers have learned.
As for the politicians, well they are keeping a much tighter grip on spending. That is borne out of necessity as much as any cultural change. New EU rules will prevent Irish politicians from driving the exchequer finances too hard. That should help.
But we have to ask ourselves whether politicians have changed, or our demands and expectations of them. I don't think they have.
The Banking Inquiry provided some explanations, some new information and some fresh insight, but its conclusions are familiar.
That is not surprising, given its constraints. It has also put thousands of documents into the public domain which would not otherwise have seen the light of day. We all know at this stage what went wrong, but remain confused about how it could have happened. Those documents provide valuable detail in helping to answer part of the 'how' question.
Real issues remain. Our Oireachtas inquiry system is totally inadequate. More powers are needed in some areas of investigation, while other areas should not have politicians next nor near them.
Fixing those gaps in the system should be a priority and will be a useful litmus test, in the years ahead, of whether we really have learned the lessons of the crash.