INSIDE THE WORLD OF BUSINESS
Nationwide adds to pressure for inquiry into bank failure
THE CALL by the governor of the Central Bank for a public inquiry into the collapse of the banking system seems more apposite with each passing day.
The revelations this week about the way Irish Nationwide went about its business may not in themselves be entirely new or unexpected, but they paint a shocking picture of a licensed bank run as a personal fiefdom.
As a consequence of this culture, the bank is now being rescued by the Government and the customers who theoretically own it will be passed from Billy to Jack as the authorities seek to create a third banking force.
The other four Government-guaranteed banks have equally sorry tales to tell and are – as the incoming managing director of AIB has acknowledged – the architects of much of their own misfortune.
Patrick Honohan’s initial call for an inquiry – made to an Oireachtas committee – fell on deaf ears in Government circles and a similar response followed his repeated call over the weekend, although the Greens seem to be bowing to the inevitable.
Their tardiness is regrettable, but not surprising. The Government and Taoiseach Brian Cowen are unlikely to emerge from any such inquiry with much credit.
The Taoiseach is particularly exposed as he was minister for finance at the time that the first cracks started to show and it might still have been possible to rein in the both bank lending and the property market.
However, Cowen would not be alone. The banks and the Department of Finance could all expect to come in for a lot of criticism in any such inquiry.
As a result, they can hardly be blamed for following in the Taoiseach’s wake and his assertion that he and his officials are too busy saving the State to devote resources to an inquiry of the sort suggested by Honohan.
It is an inadequate response and something of an insult to the governor.
The implication from it is that Honohan is unaware of the extent of the crisis facing the State and is either naive or mischief-making by calling for such an inquiry at this time.
This seems unlikely. As governor of the Central Bank and a member of the governing council of the European Central Bank, Honohan can hardly be under any illusion as to the extent of the problems confronting Ireland.
If anything, his ringside seat can only give his suggestion more credibility.
Better than most, he has seen how the events of the past 18 months have exposed massive flaws in the way this State goes about its business.
The cost to its citizens of fixing the mess is so large as to be incomprehensible to most and it threatens to beggar a generation.
A sincere attempt to establish the reasons for this and to try and fix them is not some sort of academic frolic or exercise in apportioning blame; it is simply common sense.
Nama who?
MOST OF the appointees to the board of the National Asset Management Agency (Nama) can be fairly said to have risen pretty much without trace.
Certainly, the only ones with anything approaching a national profile are the chairman Frank Daly and Willie Soffe. Both had long careers in the public service, eventually rising to the top of their particular tree; Daly at the Revenue Commissioners and Soffe at Fingal County Council. Both have subsequently served on various boards and bodies at the Government’s request.
The other members are relatively unknown quantities. No doubt their elevation will result in their previous careers being subjected to forensic analysis to ensure there are no skeletons in their closets that might compromise their ability to carry out what is without doubt one of the most important and difficult roles of its type.
It is to be hoped that the Government’s own vetting process has rendered this superfluous. Indeed, the rather grey character of the board suggests this may well be the case. None of the members have any obvious links to individuals and organisations that might have some vested interest in the outcome of the Nama process.
Apart from one that is: Steven Seelig of the International Monetary Fund. As revealed last week, Seelig – in his role as IMF adviser – was instrumental in drafting the Nama legislation and vetted it for the Government. He was a particular fan of the long-term economic value approach adopted by Nama.
If one thing has the potential to be Nama’s Achilles’ heel it is the deliberate decision to pay over-the-market prices for the banks’ bad loans. Hopefully Seelig’s enthusiasm will not blind him to this.
A new low
RELATIONS BETWEEN DAA boss Declan Collier and his airline customers appear to have reached a new low, with Collier reportedly refusing to meet them to discuss the proposed 41 per cent hike in airport charges.
The airlines have now gone running to teacher – in the form of Minister for Transport Noel Dempsey. Presumably they want the Minister to put some sort of pressure on Collier to attend a meeting with them.
It is a case of wanting it both ways. In the normal course of things, one would suspect that the airlines in question would be outraged at the notion that Collier is at the beck and call of the Minister of the day rather than the board of the DAA.
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Holidays
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