TAOISEACH BRIAN Cowen has dismissed Opposition calls for the resignation of Minister for Finance Brian Lenihan, saying he enjoys his confidence and that of the Government.
Mr Cowen also defended the manner in which Mr Lenihan and his department had dealt with last October’s report from consultants PricewaterhouseCoopers (PwC) into the loan risk associated with the six major banks.
“I think it’s important to say that Brian Lenihan enjoys my full confidence and the full confidence of the Government in relation to this matter,” said Mr Cowen.
“This a prudential matter that was referred by the Department of Finance to the Financial Regulator that is still being examined and investigated.”
Mr Cowen was speaking outside Government Buildings following his meeting with former French president Valery Giscard d’Estaing.
Referring to the report, Mr Cowen said: “There are six volumes of this report. In the overview report, there is no mention of this issue.
“There is no mention in this issue in the detailed briefing by PwC to the Minister and the department in relation to risk factors because it was not identified as a risk factor.
“It was an issue that was identified by the Department of Finance officials when they went through the detailed report themselves and was referred to the Financial Regulator themselves. It is being dealt with by the Financial Regulator.
“It did not impinge on the decision that had to be taken by Government in any event. That is the important point.”
Mr Cowen said that recent events had raised the question of the need for improved regulation in the banking system.
Mr Cowen said that the reform of the regulatory framework would be an absolute priority for Government.
“That is something that we will accord priority. The question also, in the aftermath of capitalisation, [is one] of managing risk [and] of how we can assure that risks are managed in the future in a way that underpins the stability of the system,” he said, also pointing out that risks had an impact on the image of the financial system at home and abroad.
“We must improve the regulatory system so that people can see that it works properly, not just at home but abroad,” he said.
The impact on reputations of these issues is not helpful in terms of trying to maintain financial stability, he added.
Responding to calls by Fine Gael for the establishment of bad or legacy banks to deal with bad debts, Mr Cowen said that the case had not been proven.
“If you were setting up this bad bank idea and if you were able at this point of time – which I don’t think is prudently possible – to make an accurate prediction as to what assets would devolve into bad debts over that period of time, you would have to pay for that. You can’t simply load off bad assets worth billions of euro into a bad bank. Somebody has to pay for it.”
He said that the Government would look at all options as to how to manage risk and had been very careful.
The Government had also learned from the mistakes made in other jurisdictions, where certain courses of action were taken and then subsequently withdrawn.
He said he hoped that the investigation by the Financial Regulator into transactions between Irish Life Permanent and Anglo Irish would be concluded as quickly as possible.
He also pointed out that the Director of Corporate Enforcement, Paul Appleby, has also intervened.
