Banking Crisis needs Public Inquiry

In his statement before the Joint Committee on Economic Regulatory Affairs on Tuesday, the Governor of the Central Bank, Professor Patrick Honohan argued that an inquiry into recent developments in the banking sector was required. I strongly support the Governor’s position. Professor Honohan also stated he was sure the average discount to be applied to the €77 billion loans acquired by the National Asset Management Agency would be different from the 30% estimate provided in September. We know already that the basis on which we are operating is wrong and will need to be updated. We have been informed by Government spokespersons that it will be necessary to invest further State money in capitalising the banks. We must, therefore, conclude that in analysing the budget this week and last week we were operating with sight unseen, as it were, in terms of what will be the true budgetary position in the coming months. It is vital that the Government confirm and clarify precisely what is in store in terms of further State moneys being invested in the banking system.

I concur with others on the urgent need for a full-blooded inquiry into what led to the banking crisis. Most of us have suspicions, for which there is significant supporting evidence, about what occurred. The matter should be investigated carefully and meticulously in a public manner, as has been done in other countries. For example, in the early 1930s one of the reasons public discourse in the United States turned around and members of the public were prepared to countenance difficult measures was the decision to hold a public inquiry into what had occurred, with full public disclosure and scrutiny.