PRESS CONFERENCE:THE FINNISH financial expert Peter Nyberg has said that the Irish banking crisis was systemic and that culpability extended across all areas of society including the banks, the financial regulator, the Central Bank, Government, politicians, media and investors.
Mr Nyberg, who yesterday published the report of his investigation into the causes of the banking crisis, said the systemic nature meant it was very difficult to pinpoint any one institution or decision-maker for blame.
The chairman of the commission also told a news conference that he believed the main banks told the government in “good faith” on the night of the bank guarantee on September 30th, 2008, that their problems were ones of temporary liquidity rather than more serious solvency issues.
He outlined his reasons for saying why the commission understood the government’s decision to grant a blanket guarantee, citing the “insufficient” information it received from the banks to the effect they faced only a liquidity problem.
He did criticise the lack of note-taking on the night of the guarantee, but said he was not surprised given the “extremely frantic” nature of the crisis talks that night.
It was his view that too much emphasis had been placed on the night of the guarantee. The reality was that the roots of the crisis began to emerge three years earlier in 2005.
Mr Nyberg said the report’s conclusion was materially no different from the earlier scoping reports of Central Bank governor Patrick Honohan and the Regling and Watson report, though the “way of explaining what happened may appear different”.
“What I would like to stress is that in order for a systemic crisis to happen like the one in Ireland, you need a large part of society to take part in one way or another.
“It’s enough that it does not understand the risks. Investors have to make bad decision [as do] the banks. The Financial regulator, Central Bank and Government do not understand or care. The media has to be supportive. Politicians need not to understand or think there’s more important things to do.” It was extremely difficult specifically to blame any one group or institution, he said.
The Commission of Inquiry had had 200,000 documents delivered, including tens of thousands of e-mails. Mr Nyberg also said it conducted 140 interviews with key people from all relevant sectors. He refused to divulge their identities.
Asked about the blanket guarantee, he said: “Too much interest has been shown in what happened that day . . . It depended on the information that was provided to those present. That information for many reasons was insufficient. There was a clear feeling that banks were solvent and this was a temporary liquidity problem.
“The story of the crisis is not the story of 2008. It’s the story of what was understood and not understood and what was judged not to be important from 2005 onwards. That created the crisis and made it difficult and expensive.”
One of the commission’s surprising discoveries was that so few people suspected any crisis or that anything was wrong until the very end.
Asked did he sense the banks had hidden or suppressed the true situation on the night of the guarantee, Mr Nyberg said: “The feeling that remains is that, in all essential respects, it was in good faith. They just did not know. I cannot swear to it.
“If there was suspicion or knowledge of severe solvency problems, there would have been more evidence of that in some respects.”
Mr Nyberg said there was a handful of people, about one per institution, who warned about the developing risks.
“They were just the odd men and women out. If they had been listened to, things could have been difficult.”
