Ardagh calls for 'clean-out' of bank chiefs

IRISH BANKS need a "clean-out" of top executives and their boards of management, a senior Fianna Fáil backbencher has said.

Sean Ardagh said management at the banks needed to be held accountable for the current crisis and their positions should be considered if and when the banks are recapitalised.

"They have led the banks to the position they are in at the moment. Too much credit was given out too freely on the basis of trying to make a quick buck.

"Targets were set, the easy buck was looked for in the good time and insufficient attention was paid to the solidity of assets.

"There is a natural tendency to protect one's position and that would take away from the effort that is needed to drive the banks forward in the new situation we are in," he said.

Mr Ardagh, who is chairman of the Joint Oireachtas Committee on the Constitution and a chartered accountant by profession, declined to say what level the sackings should start at, but "who runs the bank should be a process for negotiations".

He also said the banks were resisting recapitalisation because it was not in the interest of top executives.

He said banks should not be allowed to continue to restrict credit while squeezing existing creditors.

This process could improve their profitability in the long term but would have disastrous consequences for the economy, he said.

A similar economic scenario occurred in Japan during the 1990s, he added.

Mr Ardagh also called for a banking commission to ensure that banks acted in the best interest of the wider economy and said both the Central Bank and the financial regulator had shown their oversight powers were inadequate.

Such a commission would be headed by a powerful figure akin to Ben Bernanke, he proposes.