Pat Neary: a tale of incompetence writ large
Joe Higgins took the bull by the horns at the Banking Inquiry. What in the name of God, he asked, had regulator Patrick Neary been doing on that bleak November night in 2008?
There he was, less than two months after the event that shamed the bankers - the dreaded Bank Guarantee - being wined and dined by the people who went rogue, the guys who brought Ireland to its knees.
Neary had turned up at an exclusive dinner being given by Ireland's bankers. Neary's number two, Mary O'Dea, was also enjoying the bankers' hospitality. Con Horan, his prudential director, was showing a distinct lack of prudence by his very presence, as he tucked into the bankers' tender beef.
The discreet feast, held in a private premises to honour retiring chairman of the Financial Regulator Brian Patterson, was hosted by the financial institutions which he and Neary regulated. It was the bankers' way of showing deep appreciation to their watchdogs.
Rubbing shoulders with the regulator that night were none other than the insiders from AIB and Bank of Ireland.
Richie Boucher, the current boss of Bank of Ireland, broke bread with Eugene Sheehy, then the head of AIB. The top brass from Irish Life were there. Seated close to them was Fergus Murphy, then head of EBS, today a senior executive at AIB.
Irish Nationwide's Michael Fingleton sent his apologies. David Drumm of Anglo Irish Bank pulled out at the last moment, substituting senior director Peter Butler in his place.
All the bankers drank a toast to their departing regulator.
The dinner for the regulator was hosted by Pat Farrell, president of the Irish Banking Federation. Today Farrell is Richie Boucher's right-hand man at the Bank of Ireland. Last week the same Boucher and Farrell eyeballed Michael Noonan. They do not care a whit that he is Minister for Finance; they will not be cutting their standard variable rates under pressure from a mere cabinet member.
Back on that dark November night in 2008, the bankers and regulators were circling the wagons. Today the bankers are re-emerging, powerful as ever. The arrogance they showed, hosting a party for their watchdog as the country sank into the mire they had collectively created, is already restored.
Today the old attitude is revived. The banks run an independent republic, telling the Government to jump in a lake.
Neary was a far humbler witness at the Inquiry than Boucher or Sheehy. He shrugged off the corporate hospitality charge, responding to Higgins by admitting that he had made an error in accepting the bankers' largesse.
Higgins did not have enough time to pursue the watchdog about the details of that evening when the regulator was so royally entertained. But his key point - that two supposedly independent arms of Ireland's financial world were too "cosy" - had landed.
Nor was the dinner a once-off occasion of corporate hospitality. Golf was usually the glue. AIB held regular golf outings in Portmarnock to keep its regulator sweet. Former AIB internal auditor Eugene McErlean has told how AIB used to provide five- course lunches for the guests from Dame Street. The Central Bankers never repaid the hospitality.
Another AIB insider reveals that games with the watchdog were "customers golf" . They always let their guests win. They often sent them home smiling, their bellies full, winners on the golf course, armed with golf balls stamped with AIB logos.
Neary's predecessor, Liam O'Reilly, was later appointed to the board of Irish Life and Permanent. Neary will not be receiving such generosity from his former friends. In his heyday bankers looked after Central Bankers. The bankers looked like patrons, the regulators like their protegees.
Pat Neary's appearance at the Bank Inquiry had been eagerly anticipated by the other players. Neary is one of the hate figures of modern Ireland. Bankers, developers, politicians and even Central Bank governor John Hurley have dumped on him. Not without some justification, but it has not been a pretty sight.
Yet the banking blame game, down at the Inquiry, has been an uneven battle. Neary's utterances at last week's session had none of the smooth rhetoric of former attorney-general and AIB chairman Dermot Gleeson, nor the patrician confidence of ex- Bank of Ireland governor Richard Burrows, nor the acquired eloquence of fallen banking bosses AIB's Eugene Sheehy and Bank of Ireland's Brian Goggin.
Neary cut the figure of a civil servant promoted so far beyond his abilities that he was struggling in the job.
Senator Michael D'Arcy asked the cruellest, but most pertinent question of the day, when he asked the hapless Patrick Neary whether he was up to the job?
The question was disallowed. The rules of the neutered Inquiry do not allow such relevant challenges.
Patrick Neary is the guy who was educated at St Ciaran's College in Kilkenny, but dropped out of UCD to help run the family market garden business. He joined the Central Bank in 1971, stayed there for 35 years until he secured the top job at the Financial Regulator in 2006.
He was appointed after what he described as a "full international competition" for the post. The selection team of non-executive directors and one outsider apparently searched the globe and found that the man in the same building was the perfect fit.
If continuity is what they wanted, Paddy was the man. After 35 years in the Dame Street fortress any employee could be institutionalised. He insisted that he had depended on the figures served up from the banks. On Thursday he described his relationship with the bankers (whom he regulated) as "professional". The mind boggles at how he could have crumbled when the hard men of the banking world began to rattle their sabres. His manner at the Inquiry was not only nervous, but ultra-respectful. He may have dropped out of UCD, but he appeared like a man who could have done a doctorate in deference.
His excuses were feeble: the now discredited "principles-led" regulation had been the norm not just here but elsewhere in Europe; everybody had anticipated a soft landing; he was short-staffed; Ireland's economy had received approval from both the IMF and OECD; he took a swipe back at the Central Bank after former governor John Hurley had pointed the finger in his direction last week.
Neary insisted that Hurley's crowd had not issued stern enough warnings in its Stability Reports. Not unreasonably, he pointed out that all the banks' accounts had been audited by top-dollar auditors with global reputations. Neary, everybody's favourite fall guy, was not going to be hanged alone.
Nor should he be. He was patently unsuited for such a challenging job.
Neary, for all his weaknesses, gave us a valuable insight into how Ireland's banks operated in the years leading up to the bank guarantee. It was a jungle. The man who spooked the nation on RTE's Prime Time in 2008 provided no reassurance last Thursday. In that RTE interview, his insistence that Ireland's banks were well capitalised failed to convince his audience that he was a figure competent to confront the crisis. His evidence confirmed that the nation's banks had run amok, without an adequate restraint on their greedy insanity. Pat Neary was a chronic failure, probably a decent man exposed by scheming bankers who ran rings around him.
Nevertheless, Neary deserves little sympathy. Just like the rest of them, his incompetence has been rewarded by a fat gratuity of €650,000 and a pension of €114,000 a year.
Not as big as his former boss John Hurley's compensation, but equally grotesque as a reward for eating at the bankers' tables.
Sunday Indo Business