Two separate reports into the banking crisis are expected to be published tomorrow after being examined at a special meeting of the Cabinet this evening.
Drawn up by Central Bank governor Patrick Honohan and by international banking experts Max Watson and Klaus Reglin, the documents are understood to be critical of the Government’s budget during the boom and the regulatory authorities.
They will inform the terms of reference of an inquiry to be set up by the end of the month.
The Government’s budgetary policy under Brian Cowen when he was minister for finance in the years leading up to the economic crash is expected to be criticised in the reports, while the regulator and the Central Bank will come in for much heavier criticism.
The Labour Party today called for the immediate publication of the reports which the Government has had for a week.
The party's finance spokeswoman Joan Burton said any delays in publishing the studies would "only fuel suspicion that the Taoiseach wants time to prepare his rebuttal of any criticisms made in the reports."
In related news, The Irish Times newspaper today revealed that the former chief executive of Irish Life & Permanent has questioned the role of the Department of Finance, Financial Regulator and Central Bank in the reporting of his company's controversial €7.45 billion transaction with Anglo Irish Bank, which propped up the bank.
ILP’s deposits, which are now the subject of two official investigations, falsely bolstered the bank’s financial health in the run-up to its collapse.
In a surprise move, Denis Casey, who resigned as ILP chief executive in February 2009 over its financial support for Anglo, has in recent days submitted a sworn statement to investigators examining the deposits.
In his statement – seen by The Irish Times – Mr Casey said the department, the regulator and the Central Bank were aware of the transactions before Anglo published the financial results.
“It now appears that no effective intervention was made at the time by any of those agencies to scrutinise or influence the manner in which Anglo reported that transaction,” he said.
When contacted, Mr Casey confirmed he had submitted a sworn affidavit to the Garda Bureau of Fraud Investigation, the Office of the Director of Corporate Enforcement and the regulator but declined to comment further.
Mr Casey questioned the department, the regulator and the Central Bank for not effectively intervening “to scrutinise or influence” how Anglo reported the deposits in December 2008.
Mr Casey said he was providing the statement as investigators have yet to contact him about the matter, despite the deposits being under investigation for 17 months.
“I am anxious that the totality of the circumstances surrounding the execution and presentation of the September 2008 transaction, which occurred in the context of extensive systemic support and patronage enjoyed by Anglo Irish Bank, are thoroughly investigated as quickly as possible,” he said.
ILP’s €7.45 billion deposits flattered Anglo’s books on September 30th, 2008, a key reporting date for the bank. Most of the money was withdrawn within days.
The transaction helped mask heavy deposit withdrawals by Anglo customers when the bank reported results for the year to September 30th, 2008, in early December 2008, but the existence of the deposits did not emerge publicly until early 2009.
Mr Casey said there was “a long-standing requirement” for banks to present and explain their financial results to the regulator before they were made public.
The regulator was “particularly vigilant” in conducting reviews during 2008 because of “the perilous state of the financial markets and the intense pressure on the funding positions of the individual banks”.
Mr Casey said the transaction arose from a request by the chief executive of the regulator, Pat Neary, and Central Bank governor John Hurley who had asked ILP to participate in a “green jersey agenda”.
Under this strategy, Irish banks were asked to help each other with “mutual in-market support at a time of unprecedented turmoil in the global financial markets in order to maintain financial stability”, he said.
The regulator has said it did not approve the transaction.