Tag: recapitalisation

Banking Crisis needs Public Inquiry

17th December 2009

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.

Collapse in State revenue was well underway before international banking crisis

27th November 2008

I was struck by the following curious point in regard to the reports today about the banks. A new group of investors have offered the Minister for Finance a solution to the problem. Last week, another group of opportunists, investors with international connections, offered a solution to the Minister for Finance. A picture comes to mind of the Minister for Finance sitting in his office, tapping his fingers on the desk almost waiting for people to come to him with suggestions. Surely, it should be the Minister who makes such bold moves. I do not agree that there is not a requirement for recapitalisation of the banks. Manifestly, there is such a requirement. There needs to be a debate on how it should be brought about and on the controls that should be put in place by Government in that regard.

I would like to hear from the Minister for Finance what he and the Government proposes to do other than waiting for others to come to them with suggestions. This seems to be the manner in which Government is being run in regard to these serious issues. The Taoiseach, when Minister for Finance, made a reasonably thoughtful speech a year ago at the Indecon conference.

I wonder if he would take out that speech, dust it down and read it again to see what it is he would propose by way of addressing the palpable sense of not alone uncertainty but real fear, which is increasing by the day and almost by the hour, across the community. Everybody is seeking a solution to the problem. We accept the Government cannot solve every problem. However, we are looking to it for some measure of inspiration and hope and for a plan, but we are not seeing anything of that nature. The budget was botched and there is a failure to face up to many of the problems that led us to where we are now. One cannot work out one’s future course until one is clear about how one arrived at where one is. We must face up to rather than dwell on the fundamental mistakes of recent years.

The extraordinary, treacherous and reckless priming of the property sector happened under the watch of this Government and this must be faced up to. Decentralisation - it appears it will be reversed in the public service reform document - was a serious mistake and a shocking proposal, one that ought never have been brought forward. We are now seeing it being at least partly reversed in the new proposals on efficiency in the public service.

The collapse in State revenue in this country was well underway before the international banking crisis emerged. That is a fact, not an opinion. We must face up to these facts and have a proper debate on them. I respectfully suggest that the Seanad is a good place to have that debate, a somewhat more relaxed and thoughtful debate than is possible in the other House.

More :: After the opposition’s repeated calls, it has just been announced that there will be an all-day debate in the Seanad on the state of the economy with the Minister for Finance present. It will take place on Friday 5 December.