Nyberg found group-think and herding behind crash

Peter Nyberg with his report in 2011

Daniel McConnell

December 15 2014 01:18 AM

Finnish academic Peter Nyberg will have the dubious honour of being the first public witness of the Oireachtas Banking Inquiry when he appears on Wednesday.

A Doctor of Political Sciences (Economics) at the Åbo Akademi, Finland, he was between 1998 and 2010 also Director General of the Financial Markets Department at the Finnish Department of Finance.

He was appointed by Brian Lenihan in July 2010 and produced his report in March 2011 after Michael Noonan had taken over in the Department of Finance.

According to "strictly private and confidential" Inquiry documents, seen by the Irish Independent, Nyberg "found significant bandwagon effects both between banks (herding) and within them (group-think)".

"The property mania that gripped the nation effectively meant that traditional values, analysis and rules were less observed or set aside in the bubble that emerged," the documents compiled by the Inquiry's expert advisors said of the Nyberg report.

Nyberg found that this herding applied to the Department of Finance, the Central Bank, and the various financial institutions.

He found that the "real causes of the banking crisis were sown in Ireland itself".

He concluded that governance at Anglo Irish Bank and Irish Nationwide "fell short of best practice".

Despite such criticisms, at the time of his report, Mr Nyberg was criticised by Independent TD and 'Sunday Independent' columnist Shane Ross, for the deferential nature of his report. "The composition of the Nyberg team explains the soft language and lack of bite in the great man's report. It pulls its punches. It spreads the blame. It refuses to name names. It reads like a mandarin's masterpiece," Ross wrote in 2011.