The Banking Inquiry: our first chance to hear directly from those caught up in the crash

The banking inquiry faces into a mammoth task today as public hearings finally begin in Leinster House. At issue is whether the committee can cut through the fog of complexity and swingeing limitations on its work to hold key protagonists to account and provide a coherent explanation of the forces behind the debacle.

The crash is the nightmare from which we are still trying to awake, the single greatest crisis to confront the State since the second World War. A supersized public bailout of the banking system magnified recession as taxpayers shouldered the losses of a small number of private corporations, inexorably leading to the loss of fiscal sovereignty and astringent retrenchment to assert order over the public finances. This is what we talk about when we talk – and we do, incessantly – of radically increased taxes and severe spending cutbacks.

For the first time in most cases, the inquiry will provide an opportunity to hear directly from the people who lost control of the situation as Ireland’s debt-addled banks imploded. It will be well into next year before the committee sees former taoiseach Brian Cowen, former Central Bank governor John Hurley, former financial regulator Patrick Neary and dozens of other former luminaries. This includes the figures who once led Allied Irish Banks, Bank of Ireland and other institutions. Well-paid then and well-pensioned now, most have receded from public view. As a result of criminal proceedings, however, scope to delve into the affairs of the former Anglo Irish Bank is limited.

First up this morning is Finnish academic and finance expert Peter Nyberg, who conducted a previous official investigation into the affair.

No matter what Nyberg has to say about his actual findings, his appearance will provide a glimpse into the inquiry's modus operandi and the constraints within which it is working. Nyberg’s report, submitted in 2011, runs to 172 pages. His team examined 200,000 documents from the authorities, 9,000 of them from the Department of Finance, and conducted some 140 interviews with 120 individuals.

That stands as a huge volume of work into the prolonged sequence of error, over-optimism, greed and professional laxity in a variety of political, business and regulatory institutions, which led eventually to disaster.

Yet Nyberg is scheduled to appear today only for three hours. In question, therefore, is whether a hearing of limited duration can provide a meaningful, comprehensive assessment of the situation in all its dimensions and the gaps in public knowledge. This depends on the committee’s capacity to pose incisive questions, secure cogent answers, avoid political grandstanding and steer away from wasteful sidetracks while retaining a sense of proportion and nuance.

Nyberg, of course, is a co-operative witness with nothing to lose from his exchanges with the panel. The same is true of tomorrow's witness, Rob Wright, a former Canadian secretary general of finance whose report on the Department of Finance was submitted in 2010. Many others before the inquiry will not be in the same category. The real test of the committee's mettle would come if a witness adopted a wilfully obstructive stance, seeking to conceal the truth or obfuscate. This would call for a considerable degree of precision and persistence from the inquiry in its questioning – not to mention readiness for any challenge to its work in the High Court. This must be seen as a clear possibility.

Observe too that the panel is quite constrained in its powers. The defeat of the 2011 referendum on the powers of parliamentary inquiries means that the committee cannot make a finding of fact against any individual if the individual contests such a finding. This will blunt the force of its ultimate conclusions, but such is the will of the Irish people. Still, the inquiry can make findings of fact in respect of systems and procedures.

The referendum itself – and appropriate anxiety to avoid any intrusion on the previous Anglo trials – goes some way to explaining why a public inquiry is starting only now. The upshot, however, is unsatisfactory delay into the final phase of the current Dáil’s mandate and the threat that the inquiry would fall if an early election is called. The entire effort would be set at nought in that event: the new law under which the inquiry is set up prevents it from continuing into the next Dáil.

This imposes especially severe constraints on the panel, whose hearings in this exploratory phase of its work resume in five weeks. Only next April will the televised parade begin of witnesses who were actually party to the action. There will be three cycles of hearings: eight hours per day, three days per week for six weeks; followed by five weeks of the same before the summer recess; and three weeks in September. The objective is to provide a narrative report in November.

Can it work? If the credibility of judicial tribunals was undermined by long delays and excessive cost, then pressure to complete the task within a fixed deadline could be a good thing. If the zealous pursuit of political advantage is a sine qua non in parliamentary committees, however, the danger remains that politicking obscures the inquiry’s essential task. Although the Dirt inquiry 15 years ago illustrates that politicians can work effectively in such a forum, it was narrow enough in its scope. In the current inquiry, by contrast, a multitude of personalities, questions and interests are under intense scrutiny.

A truthful account of how it all went so badly wrong is awaited. Arthur Beesley is Economics Editor