Sunday 19 November 2017

Taoiseach passes buck for crash again -- to watchdogs

Fionnan Sheahan Political Editor

TAOISEACH Brian Cowen yesterday again refused to accept responsibility for the banking crisis.

Mr Cowen instead pointed the finger of blame at financial regulators for failing to spot trouble in the banking system -- the same excuse as his predecessor, Bertie Ahern.

The Taoiseach was speaking ahead of a two-day meeting with Fianna Fail backbenchers in Galway that will focus on jobs and the banking crisis.

He said the cost of winding down Anglo Irish Bank would be known next month, which will boost international market confidence in the country.

Mr Cowen said the speculation about the final figure for the capitalisation of Anglo was unhelpful and affected market sentiment towards Ireland.

He said Financial Regulator Matthew Elderfield would give an estimate of the likely final cost to the taxpayer of Anglo and this would help the markets to assess the management of the problem. Mr Cowen also said he expected the European Commission to approve the Government's plan for Anglo of splitting it into two parts. He said he did not believe any remaining concerns to be ironed out were "insurmountable".

"The strategy for the bank has been accepted by the competition commissioner and has been well received by the markets," he told RTE's 'This Week' programme.

But Mr Cowen also said when he was Finance Minister there was no warning of the problems within the banking system. He insisted he only became aware of the extent of the crisis engulfing the banks when liquidity issues emerged in autumn 2008.

"That was based on the information being provided to us both nationally and internationally," he said.

Mr Cowen says there were mistakes made in the management of the economy and he took his responsibility, but repeatedly pointed to the regulatory system. Mr Ahern, the former Taoiseach, similarly says there was no warning from the regulators and that bankers told him there were no risks.

"The regulator's office never looked for a meeting with the Taoiseach in all of these years," he said on the RTE documentary 'Freefall'.

"If Lehman's didn't collapse, then we wouldn't have had a hard landing. What we needed to do was get a few years' break, where we would have had a soft landing, but because of the international situation we didn't get that, which blew a bubble that we otherwise probably would have got away with," he said.


Mr Ahern's analysis appears to ignore the conclusion of the recent banking report.

The report, by international banking experts Klaus Regling and Max Watson, says that while the Irish banking crisis bears the clear imprint of global influences it was in crucial ways a homemade crisis.

"Moreover, bank supervisors in Ireland were not called upon to deal with technically complex problems. Ireland's banking exuberance indulged in few of the exotic constructs that caused problems elsewhere. This was a plain-vanilla property bubble, compounded by exceptional concentrations of lending for purposes related to property -- and notably commercial property," it says.

Irish Independent

Promoted Links

Today's news headlines, directly to your inbox every morning.

Promoted Links

Editor's Choice

Also in Irish News