Call for inquiry into finance department's role in crisis
FORMER National Treasury Management Agency (NTMA) chief Michael Somers yesterday called for an inquiry into the role of the Department of Finance in the evolution of the financial crisis.
Commenting on the two reports into the sources of the banking crisis, he said “what’s lacking in all these reports is what was the role of the Department of Finance. That doesn’t come out at all”.
In a highly critical commentary of the department, Mr Somers said department officials were “all powerful”, there was a “lot of arm twisting” and they “were blocking everything we wanted to do in the NTMA”.
He worked for the department for several years and when the Central Bank was writing reports the department would do its best to have anything criticising it cut out, he said. On RTÉ’s Marian Finucane programme Mr Somers, now retired, said the main story of the financial crisis was the growth in private sector credit and it was told in the Klaus Regling and Max Watson report.
In 2003 credit rose by 20 per cent, and up to 30 per cent for each of the next three years, then reduced slightly in 2007.
“It’s a bit like an income that’s going up by 8 per cent or 10 per cent a year and you start spending at 20 per cent to 30 per cent a year. It can’t last, the whole thing has to come crashing down and sure enough it’s come crashing down.”
Mr Somers described the department as a “very pervasive organisation. It controls most things that move in this country. There’s a level of centralisation that is really unbelievable. There has been talk that the regulator might have been somewhat in awe of the banking system.” He said there was one key question: “Was the whole Central Bank in awe of the Department of Finance?” Mr Somers added “I think there should be an inquiry into what the Department of Finance was doing.”
He had criticised the department years ago in an interview in The Irish Timesand “all hell broke loose over it. I was hauled up before a Dáil committee with then minister Charlie McCreevy and I repeated what I said because I didn’t say it lightly.”
“He went ballistic with me over all I said. I gave out hell about the department and the way they were blocking everything we wanted to do in the NTMA.”
He offered his resignation but Mr McCreevy refused to accept it.