A recorded conversation between senior officials at former Anglo Irish Bank appears to confirm what the public has long suspected: that the Central Bank and last government were bounced into bailing out the banking system and lacked detailed knowledge of the extent of the crisis. The manner in which this exercise was conducted: through obfuscation, veiled financial threats and political pressure, exposes a clientelist system where power and contacts are paramount and nobody is held to account.
Taoiseach Enda Kenny says he understands the “rage and anger” of those citizens whose lives have been blighted by the banking collapse. But he is reluctant to say anything that might prejudice ongoing investigations. Legislation establishing a banking inquiry will be passed within months, he promises, and the Government will then decide how to proceed. So, an inquiry may get under way in the autumn. Or, perhaps not. Allowing time for public outrage to dissipate is one way of protecting established interests. And few interests are as well established or powerful as those within the financial sector.
It is almost five years since Anglo Irish Bank sought emergency funding from the Central Bank and misrepresented the extent of its difficulties. In the process, it cautioned public servants about the impact a refusal would have on other Irish banks and emphasised that its depositors were likely to be “very vocal” if the bank got into difficulties. The Central Bank, the Financial Regulator and the government buckled under that pressure and saddled the State with horrendous debts.
Formal inquiries were completed three years ago by Central Bank governor Patrick Honohan and by two international experts. They found the major responsibility lay with bank boards and senior managers; that auditors and accountants should have raised the alarm and that successive governments had contributed to the situation by fostering a property bubble. Those reports were designed to provide the terms of reference for an independent commission of inquiry. Three years on, this Government is agonising over which Dáil committee will conduct an investigation. And the banks appear to be as untouchable as ever.
Expressions of shock from opposition parties over the contents of recordings published by the Irish Independent are as unconvincing as the Government's commitment to reform. Without a realistic threat of accountability and punishment, bankers, businessmen, politicians and public servants will continue to ignore legal and ethical responsibilities in favour of personal enrichment or career advancement. An unduly deferential approach to institutions and powerful individuals must end.