Official denies existence of 'green jersey' policy for banks

A SENIOR Department of Finance official has denied the existence of a so-called “green jersey” policy for the banking sector, whereby banks were instructed to help their peers with specific liquidity difficulties in 2008.

Responding to questions at the Oireachtas Joint Committee on Economic Regulatory Affairs, Kevin Cardiff said the department was aware of potential liquidity problems in the market last year.

Mr Cardiff, second secretary in the taxation and financial services division of the department, said there was “certainly” a call from the Central Bank to banks to “allow normal liquidity interaction between banks to continue to happen”.

“There was certainly an encouragement to the market,” he said, shying away from suggestions from Senator Shane Ross that a explicit “green jersey” policy was in existence. Mr Cardiff told the committee there was “no evidence at all” of “dodgy” transactions occurring as part of official efforts to encourage liquidity.

Earlier, Mr Cardiff told the committee the establishment of the National Asset Management Agency (Nama) was “one of the most concentrated exercises [he had] ever seen in the public service”.

“There is a huge volume of work going on,” he said, adding that the outcome of the effort would be surprisingly sophisticated.

The committee heard that the development of a new regulatory structure for the financial sector was also progressing. Mr Cardiff acknowledged there had been “shortcomings” under the previous system. “We must all strive to do better,” he said, pointing to an “extensive process of change”.