Taoiseach 'has learned nothing on bank practices'

LABOUR LEADER Eamon Gilmore yesterday accused the Taoiseach of learning and changing nothing on banking practices.

Mr Gilmore said that Brian Cowen would have the Dáil believe that he had nothing to do with the past. “The problem is that the Taoiseach says he saw and heard nothing, and he will admit nothing.”

Mr Cowen said that during the period 2007-09, there was a sea-change in regard to the view of the regulatory system and its adequacy.

“For that reason, whatever work was ongoing had to take account of the new circumstances after autumn 2008, ’’ he said.

Mr Gilmore said parliamentary questions tabled by party colleague Joan Burton and freedom of information material obtained by The Irish Times, revealed some idea of the state of the Taoiseach's thinking when he was minister for finance.

He added that Mr Cowen had set up an advisory forum on financial regulation and legislation in 2007 to draft heads of a Bill to modernise financial regulation. It had met seven times in 2007 and 2008.

Mr Gilmore asked if the Taoiseach accepted that he had made a mistake in bringing in the bankers to write their own legislation and giving them a brief to prepare light-touch legislation.

Mr Cowen said he was sure the members of the advisory group were recommended within the Department of Finance.

The Government, he added, had received from the new Financial Regulator, Matthew Elderfield, a very clear statement on the sort of regime he believed was required in the current circumstances.

“The desired changes are being mirrored by much change in other regulatory systems across Europe and globally,’’ he added.

“That is because of the inadequacy of the former regulatory system, which was clearly not sufficient to address the systemic risk that eventually emerged.’’

Mr Gilmore said that the RTÉ radio programme News at One on Monday highlighted Irish Nationwide’s hiring of “forensic accountants’’ to unearth and pursue the malpractices occurring in the building society.

They were from the firm which acted as auditors to Anglo Irish Bank, “the people who could not see the loans that Seán FitzPatrick was transferring between the bank and Irish Nationwide’’.

Mr Gilmore insisted that there was a clear conflict of interest involved, adding the Taoiseach’s approach suggested that it was “the same old same old where the people on the inside track and in the golden circle are still being reappointed to examine themselves’’.

Mr Cowen replied he did not accept that in any sense whatsoever.

Mr Elderfield and Central Bank governor Prof Patrick Honohan had produced a consultation paper on various regulatory changes they now envisaged in respect of corporate governance matters.

“They are putting that out for consultation so that they may hear the views of people in the industry,” he added.

“This does not mean they are beholden to the industry, but rather that they are listening to see whether there are practical issues to be considered to ensure that the best possible practice is applied and that it will be effective and will work.”