It is unlikely that anything "really exciting and new" will emerge from the inquiry into the banking crisis, banking expert Peter Nyberg has said.

Addressing the Committee of Inquiry into the Banking Crisis on its first day of public hearings, the Finnish academic said the inquiry could look at what happened in greater depth and produce a view of what could be done in the future. But it was unlikely, he said, that something new would emerge. In 2011, Mr Nyberg produced a government-commissioned report into the banking crisis. He told the committee he interviewed 140 people for the report. He did not speak to the European Central Bank, though he was aware the ECB had discussions with its Irish counterparts prior to the government's bank guarantee.

The ECB had stressed the need for Irish authorities to make sure the contagion effects could be small or contained.

Mr Nyberg also said a lot of people, in many different ways, enjoyed the benefits of the property bubble, such as through employment and low-cost loans.

Better off

“That doesn’t mean they necessarily partied . . . but their lives felt much better than they would have been,” he said.

He acknowledged that “the costs of the crisis are not necessarily distributed in the same way as the benefits were”.

Commenting on the supervision of banks, Mr Nyberg said if the Central Bank and the Irish Financial Services Regulatory Authority had doubted the financial markets were efficient and well run, “the alarm bells would have rung much earlier and louder than they did”.

He said there were quite a lot of breaches of governance rules that the financial regulator thought were important and its response was to “start correspondence”.

It stated what the banks should do, but it didn’t check that the bank did it, he said. The regulator did not force the banks, though it had means.

How bad

Asked by Senator Michael D’Arcy (FG) how bad the Irish banking sector’s misjudgment was compared with other countries, Mr Nyberg said “the Irish institutions were pretty good at misjudging things”.

Senator Susan O’Keeffe (Lab) described Mr Nyberg’s comment that excessive risks in banking were a result of “ignorance or lack of knowledge” as “benign and very kind”, while others believed it was “negligence and selfishness”.

“Negligence implies some sort of wilfulness, and I didn’t see it,” Mr Nyberg responded.