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The Banking Inquiry has been a long time in the making, but has a tight timetable to deliver its report
By Business Editor David Murphy
Why is the Bank Inquiry important?
The banking crisis cost a gross €64bn, wrecked Ireland’s reputation and set back the lives of thousands of people who suffered the loss of employment and higher taxes.
Four major reports were carried out as to why the collapse happened. Those studies were to be followed up by a statutory inquiry. Now, six years after the bank guarantee, it is finally beginning.
What did the reports say?
Central Bank Governor Patrick Honohan’s report examined the failure of regulation which contributed to the collapse. It concluded regulators weren’t sufficiently challenging of banks.
A second report by Finnish Peter Nyberg examined the causes of the crisis and said herd-like behaviour and “groupthink” may have been key drivers of financial instability.
A third report by two experts, Klaus Regling and Max Watson, examined the economic backdrop to the crash and how the banks lost the run of themselves.
A fourth by former Canadian deputy minister for finance Rob Wright called for a series of urgent changes in the Department of Finance. He called for the Department’s structure, internal working methods and professionalism to be overhauled.
What more is left to say?
Learning what happened in the crash is the key to ensuring it does not reoccur. The public, who paid for the collapse, have yet to hear the official version of what happened from the key protagonists: bankers, regulators, civil servants and politicians.
So far the State’s probe into what happened has consisted of expert reports instead of direct on-the-record testimony from the people involved.
Are there any hitches?
Yes, plenty. Some of the key figures are facing criminal charges. Obviously probing something that is before the courts is not permitted so those areas will be avoided.
Another issue is that witnesses may decline to answer questions for matters of confidentially, which members of the Inquiry have been told will have to be respected. That could mean those involved in the bank guarantee could decline to answer due to Cabinet confidentiality.
What is the format going to be?
The first phase of the inquiry will look at the context of the banking crash. The first witness will be Peter Nyberg, who appears on Wednesday December 17th. The following day Rob Wright gives evidence, and Patrick Honohan appears on January 15th.
The crunch will come in the so-called Nexus phase.
This will focus on evidence from key players in the crisis. It is due to happen in April. According to the Banking Inquiry, it will hinge on “three broad elements – banking systems and practices, regulatory and supervisory systems and practices; and crisis management systems and policy responses and how they interacted”.
The Inquiry won’t name who it is going to call until it has contacted them. However, it is likely former Taoiseach Brian Cowen, ex-financial regulator Patrick Neary and the CEOs of Bank of Ireland and AIB respectively Brian Goggin and Eugene Sheehy will be called to appear, among others.
How long will it take?
The Inquiry is due to deliver its report by November. The deadline is tight.
Perhaps the biggest difficulty is that if there were to be a general election before it concludes it would be up to a new administration to decide whether it would continue the work of the Inquiry.