Tuesday 21 November 2017

Maeve Dineen: Bank guarantee files raise more questions than answers

Maeve Dineen

WHOSE fault was it, then? We have been here before. In fact, we have been here fairly frequently. We return here every few months -- with despair etched on our faces -- so just who's idea was it to unconditionally guarantee the deposits of all of the Irish-owned banks on that fateful night in late September 2008?

Most disasters spark myriad theories, which are later boiled down to one central narrative as the dust settles. This one has developed in reverse. It started with a simple explanation: reckless bankers lent too much to poor Americans, but soon became much more complex.

The explanations became more elaborate last week with the publication of 50 documents from the Dail's Public Accounts Committee. They unveiled a treasure trove of previously secret government documents on the events leading up to the bank guarantee almost two years ago.

Most of the documents released on Friday are memoranda and other advisory documents prepared by civil servants and outside advisers for senior civil servants and/or government ministers.

They tell us nothing about the crucial meeting that took place on the night of September 29-30, 2008, at which Taoiseach Brian Cowen and Finance Minister Brian Lenihan decided, apparently against the advice of their advisers, to guarantee all the Irish-owned banks.

Many of the documents which have been released by the Department of Finance were heavily redacted, ie censored, and many have yet to be disclosed. While what was released helps to outline what happened in the run-up to the deposit guarantee, there are almost certainly more embarrassing revelations to come.

Five areas yet to be explored:

  • The Government has always maintained it decided on the blanket guarantee based on strong advice from the Central Bank. It is time we saw this advice from the Central Bank so we can make a judgment on whether it should have taken it or not.
  • Anecdotal evidence of events running up to the guarantee would have you believe Bank of Ireland and AIB officials had a path worn into the Department of Finance. Yet the documents show the main focus was on Irish Nationwide and Anglo, with only passing references to the two biggest banks in the country.
  • While memoranda and other advisory documents make great reading, the real story of what happened is in the minutes of the meetings that took place on September 29/30. Were Sean FitzPatrick and Michael Fingleton hauled in to explain themselves -- were they economical with the truth -- or did they really believe they could get out of this mess? Was nationalisation of the two institutions on the cards that night?
  • Merill Lynch warned the Government that the blanket guarantee would have wider ramifications for other jurisdictions. Were there any steps taken to ascertain the wider impact of a guarantee that went on to infuriate our European neighbours?
  • We are almost starting to feel sorry for the former Financial Regulator Patrick Neary. At the Central Bank's annual results last week, its Governor, Patrick Honohan, remarked that "Patrick Neary was not the only man who thought things were alright". So who else did? What was the advice of two of the most powerful men in the country: the former Department of Finance general secretary David Doyle and the Governor of the Central Bank John Hurley? From reading the documents that were released you'd be led to believe they didn't even exist.

Irish Independent

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Promoted Links

Also in Business