Banking inquiry must avoid drift and retain focus
The public will have the last word on whether the benefits of an Oireachtas inquiry will outweigh the costs
It may prove difficult to loosen the existing legal confidentiality constraints on the public dissemination, via an inquiry, of certain Central Bank , Department of Finance or Cabinet records. Similar constraints surround the European Central Bank’s internal discussions and its communications with the Irish authorities. On the other hand, the key elements of these institutions’ thinking are already widely available publicly so that little may be lost from the non-availability of every internal document in its entirety.
The inquiry and the public could benefit from the fact that several key witnesses may now welcome the opportunity to explain directly to the wider public the background to their thinking and decisions, since relatively few are familiar with the detailed Honohan or Nyberg findings. Former taoiseach Brian Cowen has recently expressed such a view.
Many witnesses may emphasise that even at end- 2008, none of the “expert” domestic or external institutions (such as the IMF, EU, and OECD) were predicting anything other than a “soft landing” for the property market. The consensus then was that Irish banks were not facing any fundamental dangers.
The Abbeylara judgment that circumscribes findings of an adverse nature by an Oireachtas inquiry could constrain the nature and extent of interrogative questioning of witnesses. The new Oireachtas inquiry – the first since Abbeylara – will have to navigate some potentially complex procedural and legal issues involving unavoidable financial and time costs.
The inquiry is likely to focus much attention on the September 2008 bank guarantee. The considerations involved , including the pros and cons of alternative options, were also dealt with extensively by both Honohan and Nyberg (as well as in this author’s recent book written jointly with Antoin Murphy).
Contrary to some commentators’ expectations, an inquiry is unlikely to reveal dramatic new information on the background to the guarantee. Judgments will continue to differ as to the wisdom of this controversial decision.
This inquiry can be expected to help crystallise for the general public the “style” of interactions among key players that prevailed in the lead up to the crisis. However, this may not necessarily affect the underlying substance. For instance, although the Anglo tapes revealed much to the public about “banking culture” , arguably their content did not add significantly to what was already known about the nature of the banks’ thinking at the time.
In conclusion, serious preparatory work can help maximise the potential benefits from the forthcoming inquiry . The costs as measured in euro and in the time and attention of officials, politicians and decision-makers, the media and the public will become readily apparent as the process unfolds. In the end, the public will be the judge of whether the benefits outweigh these costs.