The Anglo Irish Bank trial highlights the importance of a full banking inquiry
Patrick Neary, the former CEO of the Financial Regulator, has been rightly excoriated in the Anglo trial.
The case shed light on one specific transaction and revealed an astonishing and indefensible failure of regulation.
However, that one deal did not bring down Ireland’s banks. They collapsed due to over-lending in a property market which had gone wild.
No banker has been or will be put in the dock for lending money in the boom which they would never recover.
However, there are other key figures whose involvement in the banking crisis should be subject to the same level of scrutiny as Patrick Neary.
The office of the Financial Regulator was overseen by a board chaired by the then Governor of the Central Bank John Hurley.
While many members of the public are rightly angry at Mr Neary’s failure, Mr Hurley also has far-reaching questions to answer.
Finnish expert Peter Nyberg in his 2011 Government-commissioned report ‘Misjudging Risk: Causes of the Systemic Banking Crisis in Ireland’ makes some illuminating comments on the regulatory regime.
He says the Financial Regulator was responsible for supervision of individual banks. He adds: “Where this work gave rise to concerns over financial stability the Financial Regulator was obliged to consult with the Governor of the Central Bank.”
In the context of the Maple 10 transaction, which was at the centre of the Anglo trail, this prompts some interesting questions.
Among them, was John Hurley aware of the details of the transaction? And was the board of the Central Bank informed?
As chairman of the Central Bank and Financial Services Authority, Mr Hurley was answerable to the Minister for Finance and the Oireachtas.
Patrick Honohan, who replaced Mr Hurley in 2009, overhauled regulation and wrote a detailed report on regulation during the collapse.
In it he argues that the original design of the regulatory regime, established in 2003, did create a complex structure which could have exposed the system to the risk of some ambiguity in the assignment of responsibilities.
But he concluded “it would be hard to show that its complexity materially contributed to the major failures the occurred.”
All of this highlights the importance of a full banking inquiry.
It should hear from the members of the board of the Central Bank and Financial Services Authority.
Putting Mr Hurley through rigorous questioning, which exposed Patrick Neary as a sub-standard regulator in the Anglo trial, would also serve the public interest.
While there may not be sanctions, at least citizens will know exactly what happened and why.