BANKS NEED to have good management in place if bank recapitalisation is to work, the chairman of the US Senate Banking Committee, senator Chris Dodd, said in Dublin yesterday.
Senator Dodd, who sought the Democratic nomination for the US presidency last year, said being in Ireland was like being back in the United States of six to eight months ago.
“You are going through exactly the decision-making process that we were going through,” senator Dodd said, speaking to reporters prior to an engagement in Dublin.
The senate banking committee has played a central role in the efforts to save the US financial sector. He said it was his view that the US did not act quickly enough.
Senator Dodd met the Taoiseach, Brian Cowen, earlier yesterday before meeting participants in an Irish Undergraduate Awards seminar.
He said it was very important that the reasoning behind the moves made by the Irish Government were adequately explained to the public. “People need to understand what is going on. Why does recapitalisation mean anything to that person with a job in Galway or Donegal or Cork city? We didn’t do that very well in the United States.”
Asked what factors should guide Government thinking when assessing whether a bank should be recapitalised, Senator Dodd cited the ability to attract capital, and good management.
“I know these are difficult and painful decisions but if you are going to have, as apparently you will, a major recapitalisation occurring, probably more so in some institutions than others, honest confrontation with management decisions, board decision makers, must be a part if it.
“You have got to have a good team in place to be able to take these resources and make them work for you, and the fact that you see a 94 per cent decline in [bank values] in a relatively short period of time, certainly raises those issues.”
He said “bottom up” issues needed to be dealt with as well as top down moves such as the recapitalisation of banks.
Asked if a Barack Obama regime in the US would work against US investment in Ireland, senator Dodd said the US sometimes gave greater tax incentives to firms that leave the US than to those that stay. But he did not see it as an “either or” situation.
“I don’t see a Barack Obama administration somehow calling everyone home and shutting down foreign investment . . . I see a combination of encouraging economic growth and job creation at home while also simultaneously recognising . . . that expanding foreign markets are critical to our own economic growth.”
Senator Dodd said he believed massive bridging loans would eventually be made available to US car manufacturers. He said the blow to US confidence that would arise if the industry was to fail would exceed the economic effect.
Addressing undergraduates, he said one of the questions that arose now for Ireland was whether it would again vote against the Lisbon Treaty. What would be the effect on foreign investment, he asked. Also, did Ireland owe the EU a positive vote, given the assistance it had given Ireland?
