Posted by Eoin O’Malley (15 July, 2010)
Even if there is no inquiry into the events leading to the decision on the Bank Guarantee Scheme, the Dáil Public Accounts Committee release of many of the relevant documents today, should allow us to draw some conclusions about the adequacy of the process, information etc. The documents are available here, there should be 56 up by the end of the day.
It would be useful if there were some sort if Inquiry which could call civil servants, ministers, the Taoiseach, bankers and others who where there or whose advice was sought. Maybe the PAC could do this – along the lines of the Dirt Inquiry. The problem with PAC, however, and parliamentary inquiries in general is that they can be seen as partisan. Dirt may have worked because the Banks were the potential villains. Another problem is the limitations on Oireachtas Inquiries regarding compellability of witnesses, and that Oireachtas inquiries do not have the power to make findings of fact or expressions of opinion adverse to the good name or reputation of citizens (and presumably non-citizens?). Another problem is the time they take – TDs have other work to do and may not be able to commit the time to do the Inquiry properly, though staff can presumably be made available to alleviate this problem.
If the main purpose of the Inquiry is to prevent re-occurrence, rather than apportion blame then some of these issues would not be relevant. However we presumably also want such Inquiries to act as a deterrent to bad policy-making in the future, so perhaps it would be better to take it out of the hands of the Oireachtas. The question then arises whether it should be a judge (which it usually is – the state seems to consider judges to be the only humans alive with integrity!), or someone with some expertise. One could use a former civil servant, but there’d the fear that this could lead to a whitewash. Former SG in Communications, Brendan Touhy could do it. I suspect he would be above suspicion of producing a whitewash.
UPDATE –What was released to the press last night (presumably by the government) supports the government line that it was given bad information, and that Patrick Neary’s to blame was more interesting than anything else here.
In fact much of it relates to what the department thought it knew regarding financial stability in the year up to the collapse. Of those documents that relate to the Guarantee Scheme itself, much of was in the public domain already – if not in this format. So we have speaking notes for the minister. But the letter from the Secretary General indicates they won’t give anything confidential out. So the memo to government (if they actually managed to get anything on paper, reasonable enough if they did not given the rush) is not there, nor are notes from conversations between the minister and the Taoiseach or the minister and his civil servants. It’s hard to accept the commercial sensitivity line used to withhold some of the documents relating to the Banks – we now know that most of it was made up, or certainly based on optimistic assumptions and hardly commercially sensitive now. In fact the SG makes this point.
5 thoughts on “Bank Guarantee Scheme documents released”
I think thats a fair assessment of some of the potential problems. Its a difficult business as the potential for unfairly damaging reputations is immense, decisions were taken so quickly and in something of a dark room as regards outcomes either way. The inquiry would, in my view, need to try identify the outcomes of different decisions in order to understand the thinking and this would not be easy. But a focus purely on the rights or wrong of the guarantee itself will be to narrow to understand the thought process. The alternatives that were considered and their outcomes and reasons for rejection are just as important
There is also a danger that we lead to a division between politicians on one hand and the permanent government in the form of the civil service and Department of Finance on the other. While an inquiry would serve a strong moral purpose if it ended up damaging the relationship between those civil servants who gave advice and the politicians who took decisions based on it then it could lead to a real issue in the future for the trust between the groups and how they approach another crisis. That outcome might not be as healthy for democracy.
Yes, an inquiry should not focus on whether the policy was a good one or not, but whether the government was in a position to make a better one and if not why not, and if it was in such a position why didn’t it?
We need to stand back from this deluge of documents and examine the political context. With 24/7 news media coverage this will be (perhaps, not even) a 7 day wonder. It won’t do anything much expect bury the banks and their regulators deeper in the mire – which was going to happen anyway in the banking inquiry.
We’re going to see a very clear line being drawn between politics and policy, on one side, and regulation and banking, on the other. The Oireachtas Finance and Public Service Cttee which is being charged to report on the macroeconomic policy issues won’t have the impact of a feather duster.
The banks were doing a high-wire act; massive inter-bank lending was the high wire. Nobody expected the high-wire to disappear suddenly. It took some time for the banks, the regulators and even the government’s advisers to recognise that no high-wire meant not only no liquidity, but also no solvency (because the property market was on that high-wire as well). Ireland didn’t (and still doesn’t) have a bank resolution process; no one anywhere has an entire bank system resolution process. It took the EU 5 months to cobble together something to address the damage Greece was doing to the Eurozone; there was no way it could get its act together to ride to Ireland’s rescue on 30 Sep. 2008.
And so we are where we are. And most people still seem to find it very hard to join the dots leading from executive dominance, the capture of government (and the machinery of government) by vested interests and a powerless parliament to the mess we’re in.
A major point to be seen from the financial system disaster is the very poor quality of oversight. Whether it was the Financial Regulator, the Finance Ministry, or politicians in Government or Opposition – the people of Ireland were tragically let down by those who we believed were tasked with safeguarding the nation’s financial health. The new releases show that the bankers either did not know the escalating weakness of their own operations or chose to downplay whatever concerns they did have. What definitely must come out of this crisis is a far stronger oversight system that must be able to compel detailed (and accurate) information long before the walls come tumbling down.
Does it make any difference if there were 100 experts giving advice to Lenihan or if he had read 100 reports, the bottom line is that he chose to take action at the behest of about 10 people with whom his political colleagues are all financially compromised – so it seems that Cowen and Lenihan took the decisons they made as Fianna Fáil people rather than as a government and felt unable to reject the obviously bad advice they were getting from the cronies – we keep hearing Brian Lenihan is the best and brightest in that party and an intelligent man – it seems remarkable a barrister would suddenly change the habits of a career (in which I assume he learnt how to say no to people and base a decision on facts not opinions) so where is the factual evidence he received from the cronies that they were right and the experts were wrong – instead it seems Lenihan and Cowen took the cronies word over all the experts but based on nothing but what they said – it is astounding that Lenihan never asked them to back up what they were telling him?