Cowen cautious about holding inquiry on causes of banking crisis

THE TAOISEACH reacted cautiously to the call by the governor of the Central Bank for an inquiry into the causes of the banking crisis.

On Tuesday, Dr Patrick Honohan told the Oireachtas Committee on Economic Regulatory Affairs that the inquiry should be similar to a US congressional hearing into the September 11th terrorist attacks on the US.

In the Dáil yesterday, Brian Cowen said he had read what Dr Honohan had to say.

“From my point of view, the resources of the State are currently involved in ensuring banking stability and that we can deal with the economic and financial issues that arise.

“I am sure there will be economic historians and economists who will continue to talk about the failure of the regulatory system in this and other countries regarding the challenge faced by us.

“However, I would have to carefully consider such an inquiry before giving any commitment. As we know from the Abbeylara case, there are limitations on Oireachtas committees being able to inquire into questions of fact.’’

Mr Cowen said there was also the question of other established inquiries which were still ongoing and to what extent they had been able to deal with the issues in a timely fashion that did not undermine but maintained confidence in the banking system.

Labour leader Eamon Gilmore, who raised the matters, said it was the people’s money, and not the State’s resources, that were involved in the banking situation.

Mr Gilmore accused the Taoiseach of not wanting an inquiry because it would expose the close connection that existed between Fianna Fáil, developers and bankers.

“An investigation would also expose the fact that the Taoiseach presided over this when minister for finance,’’ he added. “He is afraid that in an inquiry, the track will lead to his door.’’

Mr Cowen replied: “Nice piece of political rhetoric, but absolutely baseless in terms of the facts.’’

Earlier, Mr Gilmore said that this week last year Sean FitzPatrick had resigned as chairman of Anglo Irish Bank after it was revealed that he had been moving personal loans off the bank’s books to another institution and then back again, in order to conceal them.

“Since then we have had a high-profile Garda raid on the bank, and the House has been told that the Director of Corporate Enforcement is doing some kind of an investigation.

“However, no one has been called to book for what happened in the bank.’’ Since then, he said, Anglo Irish Bank had been nationalised. Some €4 billion of taxpayers’ money had been put into it, while another €7 billion had been put into AIB and Bank of Ireland.

“Between them it comes to €11,000 million of taxpayers’ money,’’ said Mr Gilmore. “It is the largest bank robbery ever, except on this occasion it is the banks robbing the people.’’

Despite this, he said, the banks were still not lending to business as they should be.