The Irish Times view on Michael Fingleton: nobody shouted stop

Following on from the closure of NAMA, the State’s bad bank, the death of Michael Fingleton at the age of 88 is another bookend to the 2008 banking crisis. Fingleton, who had been the chief executive of Irish Nationwide Building Society (INBS) for 38 years, became one of the most controversial figures of the financial crash, amid huge losses which emerged on commercial property lending.

While Fingleton said he “regretted” the collapse of INBS, he never apologised for his actions and held on to a €1 million bonus he received in 2009, just weeks after the Government banking guarantee. His diversion of an old-school building society, which he had built, into commercial property lending was his crucial misjudgment, eventually leading to a €5.4 billion taxpayer bail-out.

Fingleton ran INBS like a personal fiefdom, with disastrous consequences. The “light touch” regulatory environment run by the Central Bank enabled this to happen and external auditors and the bank’s board were also culpable.

Fingleton fought the inquiries into the collapse of the INBS and his role in it. He was embroiled in a long-running Central Bank inquiry which was dropped in 2019 following his debilitating stroke. A civil action in the High Court taken by the IBRC liquidators concluded last October, with a judgement pending.

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There has been a complete overhaul of financial regulation since the crash, with many of the functions of the Central Bank of Ireland transferred to the Single Supervisory Mechanism in Frankfurt. It is hard to imagine anything like a collapse similar to INBS in the future.

But there are lessons. In the US in 2008 there was much focus on exotic financial instruments linked to sub-prime mortgages as the root of financial upheaval. Ireland’s financial collapse was caused, rather, by “old-fashioned” bad lending, concentrated in one exposed sector. Sometimes risk is complex and sometimes it is hiding in plain sight. Regulation and oversight remain crucial. The economic price of a crisis in the financial system is enormous and lasts many years.