By Fintan O’Toole (for the Irish Times)
Paranoia is generally the most sane response to anything our rulers do. So, after all the leaks about the Government’s intentions to hold a banking inquiry in secret, my immediate reaction is to demand a public parliamentary inquiry. Thinking more coldly about it, however, I reluctantly concluded that such an inquiry would be essentially useless.
Before deciding what form an inquiry should take, we must define what exactly we need to know. The known unknown in this case is not really what the banks did or why. We know that they threw money around with more abandon than a fleetful of intoxicated mariners. The bonus culture incentivised executives to think only about apparent end-of-year profits. They got away with this internally because of a complete absence of ethical qualms and because of the cronyism that is so well described in Shane Ross’s book, The Bankers. It would be interesting to have more detail on how all of this unfolded but I can’t imagine an inquiry substantially altering these broad conclusions.
What really needs to be investigated, therefore, is not the banks themselves. It is the triangular relationship between the banks, the property developers and Fianna Fail. This is the Bermuda Triangle into which the Irish economic miracle disappeared without trace. It is this set of relationships that accounts for the nature, not merely of the crash, but of the continuing political response to it.
We know the consequences of this toxic nexus of mutual aggrandisement well enough, since we are living with them every day. But we don’t know nearly enough about the ways in which it operated and continues to operate. A blow-by-blow account of the connections, the lobbying, the blind eyes, the nods and the winks would be immensely valuable. It would answer questions that go to the heart of the culture that both created the disaster in the first place and is likely to recreate it through Nama.
How much money, for example, did builders, developers and bankers give Fianna Fail? Elaine Byrne’s very valuable study showed that 40 per cent of disclosed donations to Fianna Fail between 1997 and 2007 came from the construction and development sector. But most donations are not disclosed. The Standards in Public Office Commission has pointed out that it cannot account for O10 million of the O11 million parties spent on the last general election. An inquiry with the power to reveal the details of donations made by builders, property developers and banks would thus serve a very useful function.
The inquiry should also look at the history of lobbying, both formal and informal. Why, for example, did Brian Cowen as minister for finance override proposals by the Revenue to tax contracts for difference, a measure that would have curbed casino capitalism and in particular Sean Quinn’s disastrous adventures in Anglo Irish Bank, for which the public is currently paying?
A full and detailed account of lobbying by developers and bankers and the responses of ministers would be well worth having.
And what precisely was the relationship between government and the financial regulator on the one side and between the regulator and the banks on the other? Why did the Department of Finance, again under Brian Cowen, do nothing at all about the explosion of major international frauds emanating from the International Financial Services Centre in Dublin? What was the effect of the merry-go-round in which retired regulators moved on to bank boards? Why was there virtual impunity for high-level financial crimes?
And what, exactly, was the nature of the relationship between developers and bankers? The developer Mick Wallace, for example, has spoken publicly of being told by a bank that he would get a loan for a project only if he used a particular builder favoured by the bank. Other developers, particularly those with nothing left to lose, may have interesting stories to tell.
These are the kinds of questions that really need to be answered if we are to understand - and ultimately to receive accountability for - what is happening to us. And we’d be as well off asking Jedward to conduct this inquiry as giving the task to a Dail committee. The reason for this is simple - the issues are utterly and inescapably political. What we need is not the political system sitting in judgment on the bankers but an independent body scrutinising the central role of the political system itself. A Dail committee cannot do this. Even the rightly lauded Dirt inquiry report, which is very good on the banks, is very weak on the political aspect of that scandal.
An independent inquiry could be chaired, for example, by Justin O’Brien, professor of corporate governance in Queensland, who has international standing, knows Irish banking intimately and called the crisis before it happened. Bo Lundgren, who handled the Swedish banking crisis of the 1990s and Elaine Byrne would complete a team with a real chance of telling us the truth.