Sunday, December 27, 2009

Financial Crisis Inquiry "Could Damage Confidence in Ireland"

Via the Independent: Taoiseach Brian Cowen has ruled out an immediate inquiry into the causes of the banking crisis on the grounds that holding such an inquiry now could damage confidence in Ireland. In an interview with the Sunday Independent, Mr Cowen said that while he was not coming to a conclusion on calls for an inquiry, his priority at the moment was to "keep confidence in the country" at a time when the banking system here was being restructured.
Mr. Cowen, in his own words: "I'm trying to engender confidence in the system. We're in the midst of restructuring the banking system. We've got to keep confidence in the country and in what it is that we're trying to do. The historical issue of how we got here is an issue that will happily be dealt with... but let's deal with that eventually, in due course."

This deserves a spot in Ripley's Believe-it-or-not! An inquiry will improve confidence in Ireland, not damage it.
The article also notes that the former minister for finance, Charlie McCreevy, was loaned €1.6m by Irish Nationwide Building Society in 2006 to buy an apartment (then valued at E 1.5m, but now worth only 600k) in contravention of the Society's rules against 100% mortgages. The damning sentence in the article: Sources at the Irish Nationwide have maintained that not alone did the loan comply with the bank's lending policy, but that it was also approved by the board.
Would an ordinary customer have been given a 100% mortgage against the rules? I should think not. The BOD's approval of a loan in contravention of its policies only illustrates the need for an inquiry into the corrosive conflicts of interest and crony capitalism that may have played a role in creating the mess we are in.