Wednesday, December 23, 2009

Media Joins Financial Crisis Investigation Bandwagon

The mainstream media has joined the chorus for a thorough investigation into the causes of the financial crisis. The Independent focuses on Brian Cowen's reluctance to order one:
Don't expect the Taoiseach to agree to these demands for an inquiry any time soon, if at all. Because when it comes to banking, it is all too obvious that there is something rotten when it came to regulation in the Kingdom of Cowen.

Expect lots of spinning in the next while about the likely cost of such an inquiry and of how long it would take, with arguments about the interminable tribunals trotted out to dissuade us about the wisdom of launching a banking probe.
It concludes with this: We need an inquiry to tell us why did the banks overlend, why the regulatory system failed so dramatically and why a dangerous housing bubble was allowed to inflate pushing thousands of homeowners into negative equity.

The Irish Times also has a piece listing obstacles to an inquiry. The key obstacle: the Supreme Court judgment that stopped the Abbeylara inquiry in its tracks over a decade ago. That case arose from a parliamentary inquiry into the circumstances surrounding the shooting dead of John Carthy by garda√≠ after a siege in Longford. The Supreme Court held that the committee had no power to conduct an inquiry which could lead to “adverse findings of fact and conclusions.”

The article concedes that this is not much of an obstacle because an inquiry would not serve as a substitute for a court. The author focuses on inquiries by the Oireachtas or existing government entities. I've argued previously that such investigations are of limited utility. At best, they can complement an inquiry by an independent commission or take follow up action. What is needed is a full investigation into the causes of the crisis by an independent commission armed with the power to obtain evidence from relevant actors.