Irish Republican News · June 11, 2010
[Irish Republican News]

[Irish Republican News]
IRISH REPUBLICAN NEWS: Fianna fraud
Fianna fraud
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26-County Taoiseach Brian Cowen is facing a motion of no confidence in the Dublin parliament after his government was harshly criticised by two preliminary reports into the banking crisis and linked to an attempt to falsify the financial position of Anglo Irish Bank.

The first official reports into the causes of the banking crisis concluded that home-made factors and not international financial volatility were the cause of the meltdown, despite repeated attempts by Cowen’s Fianna Fail party to shift the blame.

Hard-hitting reports by the new Central Bank governor Patrick Honohan and international banking experts Klaus Regling and Max Watson heavily criticised inflationary government economic policies, a weak system of financial regulation and poor bank lending.

Major failures in banking regulation and the maintenance of the financial stability of the country -- coupled with excessive and high-risk lending by the banks -- led to the crisis, the reports concluded.

The reports did not address concerns over corrupt practices involving Fianna Fail and property developers, one banking official said a secret agenda was behind attempts to inflate the balance sheet of Anglo Irish Bank amid investor doubts grew over the bank’s viability. The then management of Anglo Irish Bank are currently facing a fraud investigation over their lending and accounting practices.

The opposition parties said the reports provide compelling evidence that Mr Cowen had been “misleading the public” with regard to his role as minister for finance in the lead-up to the economic and banking crisis.

Labour party leader Eamon Gilmore said the “irresponsible action” of Fianna Fail had resulted in “people suffering in a very real way”.

He told Irish radio the reports made “serious criticism of Government and of Mr Cowen in particular for his handling of the economy in the period leading up to the bank crisis”.

“What needs to change first of all is the Government...we need a fresh start in this country”

Mr Gilmore said it will be a “watershed” moment for Fianna Fail backbenchers who were not in cabinet at the time covered by the reports.

“They can’t go in and vote confidence in Mr Cowen and his cabinet and his government and then go back to their constituencies and distance themselves from that decision.”

Minister for Finance Brian Lenihan said he “deeply regrets” what happened during the banking crisis and admitted that some decisions made by the government of the time were “wrong”.

He acknowledged there were flaws in both regulation and policy.

And while he insisted that up to the beginning of this decade the economic boom was “healthy”, with export-led growth and job creation, the construction-led element became “far too dominant”, he said.

He said government policies had not attempted to tackle vaulting property prices because there was no demand for such measures.

“I didn’t see in the political system generally any appetite for introducing a property tax during that whole era,” he said.

“Of course the government has to take primary responsibility, but the report does point out the general what they describe as the socio-political context, and the socio-political context was that more and more money was demanded to be spent all the time, and less and less tax all the time.”

Dr Honohan found that the Financial Regulator was “excessively deferential and accommodating” to the banks, while the Central Bank, led by his predecessor John Hurley, had also toed the line.

The Regling-Watson report said regulation was not “hands-on or pre-emptive”. Regulators under-estimated the funding risks linked to the banks’ over-exposure to property.

“The fact is that supervisors, right to the end, clung on to the hope of a soft landing for the economy and the property market,” they said.

The Regling-Watson report found that the Government failed to rein in bank lending and that policies had only “fuelled the fire”.

Taoiseach Brian Cowen accepted that policies introduced while he was minister for finance had led to a “deeply challenging” situation for the Irish people and he regretted that. He agreed that a more restrictive fiscal policy would have helped in slowing the economy.

“Hindsight is always clear and obviously we would not have taken such a course if we had known of the scale of the property collapse which was facing the country,” he said.

“I deeply regret that.”

And in a surprise move, Denis Casey, who resigned as chief executive of Irish Life and Permanent in February 2009 over a seven billion very short-term loan to Anglo, has in recent days submitted a sworn statement to investigators examining the movement of funds.

In his statement Mr Casey said the Department of Finance, the regulator and the Central Bank were aware of the transactions before Anglo published the financial results. The purpose of the brief loan facility was to disguise the serious debt crisis facing Anglo as it publicly reported its accounts in September 2008.

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 his bank to participate in a “green jersey agenda”. The regulator has claimed it did not approve the transaction, which is the subject of a Garda fraud investigation.

Labour finance spokeswoman Joan Burton said: “Never before in the history of the State have the policies of a Government been subject of such excoriating criticism as today’s reports on the banking crisis from both the international panel and the Central Bank governor.

“Ministers have worked overtime in the past week to extract as much favourable comment as they can from the two reports. All that effort is in vain because the entire thrust of both reports is a thorough indictment of the financial governance of this State over a prolonged period.

“Both reports stress the ‘homemade’ elements of the banking crisis and they dismiss out of hand the ‘Lehman defence’ so often invoked by Ministers that international factors were primarily to blame for Ireland’s problems. Not so, according to both reports.”

Sinn Fein Dail leader Caoimhghin O Caolain said: “These are reports of fraud, burglary and mugging of the Irish people by a gang of corporate criminals aided by this government. People need to be held to account.

“These reports show how the Government recklessly managed our economy and led us directly into the current financial crisis. They are an indictment on Government policy and of Brian Cowen’s role as finance minister.”

* An opinion poll out today shows that support for Fianna Fail and satisfaction with the government have dropped back to the record lows they reached last September. Just 12 per cent of voters are satisfied with the way the Government is doing its job (down seven points) while 83 per cent are dissatisfied (up seven points).

Meanwhile, Labour, at 32% (up eight points) has overtaken Fine Gael Fine Gael on 28 per cent (down four points) to become the largest party in the 26 Counties in terms of popular support, according to the poll. Fianna Fail is now on 17 per cent (down five points), with the other parties unchanged.

© 2010 Irish Republican News