Saturday 17 March 2018

Lenihan receives banking inquiry reports

Fiach Kelly and Fionnan Sheahan

Finance Minister Brian Lenihan yesterday received two reports on the banking crisis.

Failures to regulate banks and too many property tax breaks will be highlighted in the reports.

The reports form the first part of the inquiry into the near collapse of the banking system.

One report, from international banking experts Klaus Regling and Max Watson, focuses on the banks' activities in the years before the crisis.

The second, from Central Bank governor Professor Patrick Honohan, looks at the regulation of the banking sector by the Central Bank and Financial Regulator.

Mr Lenihan is expected to bring both reports to the Cabinet, but it is not clear if this will happen today or at a later meeting. A spokesman for Mr Lenihan said he hoped the reports would be released to the public in the next 10 days.

Taoiseach Brian Cowen said yesterday that a Dail debate and more investigation would follow on from the reports.

"As we said, we would have a scoping inquiry from those authorised personnel and they'll be reporting to the Department of Finance for assistance and we would consider those reports," he said.

"And in due course we'll have a Dail debate on them as well and arising out of that we'll have further investigation."

Once the report by Mr Watson and Mr Regling is released, the Government will then move to a second phase, which is a statutory commission of investigation. The terms of reference of this commission have not yet been decided.

Prof Honohan's report examines the regulation of the banking system by the Central Bank and Financial Regulator. It is expected to find the Regulator failed to adequately police the banking system.

The tax breaks provided to sections of the property industry in the years leading up to the crash form a heavy part of the report by Mr Regling and Mr Watson.

The decision to give tax breaks to various types of property investments will be a central plank of the report and this has the potential to cause political embarrassment.

Mr Cowen admitted earlier this month that tax breaks should have been shut off by the Government at a much earlier date.

The remuneration levels at Irish banks is also a central area of concern for the inquiry, along with wholesale funding.

Irish Independent

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