The reckless behaviour of our top bankers must be aired and policy errors scrutinised, writes NOEL WHELAN
THE CASE for a detailed investigation into the origins of the banking crisis is compelling. That is why designing an appropriate investigation with care is so important. Any such inquiry must be delicately constructed so it can be both comprehensive and efficient and the time should be taken now to design it properly. It is important to learn lessons from past mistakes and it is particularly important to avoid repeating mistakes made in establishing previous inquiries.
The various tribunals and public investigations set up here over the last decade and a half can each be said to have dealt with significant and important issues but cumulatively they cost an awful lot of public time, effort and money which could otherwise have been spent policing the present or better planning the future.
The wrong and reckless behaviour of our top bankers must be aired and the regulation and policy errors which allowed their behaviour persist forensically examined. It is not just a prerequisite to restoring public confidence in the banking system. Ensuring public acceptance, such as it is, for the bank guarantee and for Nama has always been premised, in my view, on a public expectation that there would at some stage be a detailed exploration of the causes of the banking crisis.
We have now reached that stage. A decision should be taken in principle to establish an inquiry into the banking crisis but then a limited period of time should be used to design properly the appropriate format for such an investigation. An inquiry with overly wide terms of reference will take forever. An inquiry with too narrow a focus would be of little use. A brash or politically charged inquiry runs the risk of undermining criminal or regulatory prosecutions, while a badly designed inquiry would be open to legal challenges.
To suggest, for example as Enda Kenny did this week, that the current atmosphere and attitude towards the banks is such that bankers who caused this crisis would have no option but to co-operate fully with a banking inquiry is extraordinarily naive. An effective inquiry into our banking crisis would have to examine the actions of some of this country’s most powerful individuals and commercial interests. Many of these people are particularly precious about their reputations and would be quick to muscle up with lawyers against any inquiry and would not hesitate to go to the courts if they felt their constitutional rights were being infringed.
Many advocates for a banking inquiry are quick to point out that Patrick Honohan, the new governor of the Central Bank, is among those who have called for such an inquiry. However, most seem to have missed what Honohan had to say about the type and format of inquiry envisaged. Appearing before a Dáil committee last month, Honohan instanced the 9/11 commission established by the US Congress as an option that should be explored.
The 9/11 commission, as I have written here before, is a good prototype for inquiries into complex but politically sensitive matters. However, although established by a Bill, it was an extra-parliamentary inquiry which conducted the bulk of its work in private. The Oireachtas-based inquiries suggested by both Fine Gael and Labour this week would be entirely different and are not what Honohan proposed. Indeed, Honohan called for some lateral thinking and suggested that new models of inquiry, involving not just politicians but experts such as economists and social scientists, should be explored to understand the banking crisis.
It might help to approach the investigation and accountability process about the banking crisis in three stages.
The first and perhaps most important phase could be a pre-inquiry stage. This would involve a process, independent from government and party politics, within which the terms of reference and format of the banking inquiry could be developed. This could be done by a suitably qualified person or panel of three suitably qualified people who would be given the task of scoping the inquiry.
There are useful precedents for this, including the report prepared by Shane Murphy SC leading to the establishment of the Morris tribunal into the activity of some gardaí in Donegal, and the report prepared by George Birmingham that preceded the Commission of Inquiry into the Ferns Diocese.
In the former, Murphy was asked specifically to consider how a tribunal could be conducted without undermining ongoing criminal and civil proceedings. In the latter, Birmingham explored what degree of co-operation would be forthcoming from those who would be investigated by a formal inquiry. Both tasks would be required of the person or persons asked to scope out ground for a proposed banking inquiry.
When this person or group has suggested terms of reference and a format for a banking inquiry, their report could be debated by the Dáil. A commission of inquiry could then be established with a fixed timetable to undertake the bulk of the investigation into the causes of the banking crisis in private. The report of this commission could then be sent to a Dáil committee, which would hold public hearings at which those identified in the report would be held to account. This would include Ministers and others with responsibility for policy formulation.
An unprecedented crisis calls for an unprecedented approach to the inquiry.