Government 'took bronze' in blame race

THE GOVERNMENT was in third place among those blamed for the banking crisis, Minister for Finance Brian Lenihan told the Dáil.

He said Governor of the Central Bank Prof Patrick Honohan shared the view of Klaus Regling and Max Watson that the macro-economic and fiscal policy did play a central role in contributing to the crisis.

“It is worth noting that Prof Honohan pointed out that while three-quarters of the crisis was home-grown, the primary culprit in the generation of that crisis was the banking sector,” Mr Lenihan added.

“The secondary culprit was the supervisory system, and the Government is in the bronze position in that particular race.” Mr Lenihan said the Opposition parties had not identified the problems.

“I do not often make that point, because I do accept that governments must take responsibility for what happened,” he said.

“But, certainly, in so far as oppositions are concerned, the proposals formulated in the last general election would have exacerbated problems substantially, particularly those relating to stamp duty.”

The Minister was responding to a Fine Gael private member’s motion calling for an extension of the commission of investigation’s terms of reference to include Government policy.

Mr Lenihan, who rejected the motion, said the recent reports were of a preliminary and scoping nature and were intended to point the way to a more detailed examination of specific issues by a statutory commission of investigation.

Both reports had identified a number of areas to be investigated and the terms of reference submitted by the Government faithfully reflected the concerns of the authors.

Fine Gael’s acting finance spokesman Kieran O’Donnell said the two banking reports were objective in orientation and criticism of Government policy.

The commission’s work, he said, should ensure a whole rather than a selective approach which would provide extra weight to the initial reports and ensure they not alone learned the truth but noted the mistakes made and the changes required. Prof Honohan, he said, had stated that the guarantee scheme was too broad and ended up costing the taxpayer.

Mr O’Donnell said they had no idea of the Minister’s motivation in terms of the policies he introduced or the official advice provided by him to the department.

“It is a weakness in our democratic system that advice provided by departmental officials is not put into the public domain thus allowing us to know the background upon which ministers made decisions,” he said.

Mr O’Donnell said the authors of the reports had not interviewed the “main player”, Taoiseach and former minister for finance Brian Cowen. He believes this represented a weakness in the reports.