BUSINESS OPINION:The rather pervasive view that accountability is overrated in Irish business is wrong, writes JOHN MCMANUS

THE €50 billion car crash that is the Irish banking industry is also - among other things - an interesting case study on the merits or otherwise of firing senior management when a serious crisis strikes.

The general presumption is that the people who got you into a mess are not the people to get you out of it, although they often want to. The theory is that they are the prisoners of their own decisions and cannot objectively assess the problem.

Thus when the country's top bankers come to the Minister for Finance late one evening - as they did two years ago - saying their institutions could not open the next morning without the support of the taxpayer, the conversation should shortly turn to the subject of their replacement.

The reluctance of the Government to clear out the management and boards of the six financial institutions covered by the guarantee two years ago last week was one of the more inexplicable aspects of a rescue that showed undue deference to the wishes and needs of the rescued rather than the rescuers. It was also the cause of much understandable public anger.

The chairmen, chief executives and other senior executives of the banks were left in place while their institutions limped along for a few months in a state of denial about the extent of their predicament and the inevitable consequences.

It took a combination of scandalous revelations about corporate governance at Anglo Irish Bank, Irish Nationwide and to a lesser extent Irish Life and Permanent to force the Government to act months later.

Change only came at the two big banks when they finally were forced to admit they were bust and needed taxpayer money.

Even then the Government bent over backwards in most cases - Anglo Irish Bank being the exception - to facilitate amicable departures with decent pay-offs.

Michael Fingleton - whose bank was euro-for-euro the second biggest disaster - walked away with a €1 million bonus. Another chairman - Gillian Bowler of IL&P - dug in her heels and was allowed stay.

The resulting mess produced a range of outcomes. Two banks - Anglo Irish and Irish Nationwide - ended up with entirely new boards and managements. Although even in Anglo's case the chairman, Donal O'Connor, who was appointed to the board of the bank before the crisis in June 2008, hung on.

In the case of Anglo the new management figures were hired in from abroad, while Irish Nationwide's new cadre were mostly Irish, with many of them Bank of Ireland alumni.

Bank of Ireland ended up with a new chairman - former chief executive Pat Molloy - and an insider Richie Boucher, who oversaw much of the lending to developers that got the bank into so much trouble, was promoted to chief executive.

AIB's deputy chairman Dan O'Connor was promoted to executive chairman and insider Colm Doherty was promoted to the role of managing director.

These appointments were made in defiance of the Government's wish that outside candidates should be appointed.

Irish Life & Permanent also appointed an insider to the role of chief executive.

The EBS replaced its chairman and left the chief executive, Fergus Murphy, a relatively new appointee, in place.

Some two years later the only two banks still standing on their own two feet - albeit rather shakily - are Bank of Ireland and Irish Life & Permanent.

Anglo Irish is being shut down and its new board and management rather badly damaged by the EU's rejection of their good bank/bad bank proposal. Irish Nationwide has no future as independent organisation and the EBS is being sold. AIB will be over 90 per cent owned by the Government come Christmas.

If it were not for the catastrophe at AIB it would almost be possible to argue that the result of the experiment was conclusively in favour of leaving insiders in charge to sort out the mess.

But the inability of O'Connor and Doherty to save AIB from State ownership means that the result is somewhere closer to a draw.

A more realistic assessment might be that the "new" management at all these institutions were powerless to alter the destiny of the institutions as the damage had already been done.

It's clear now that reckless behaviour of the "old" management at Anglo Irish, Irish Nationwide, EBS and AIB meant that the banks' fates were sealed once their losses were crystalised by the National Asset Management Agency.

The new or not-so-new management at the two other banks on the other hand have survived - so far - because they and their predecessors were somewhat less reckless.

This, as much as their own actions since being appointed, has determined the fate of their institutions.

So, are we to conclude that the shambolic and at times almost cowardly approach taken by the Government towards cleaning out the bank boards was in fact pretty irrelevant when it came to influencing the outcome of the process and the cost to the taxpayers?

If it had fired the lot of them on September 29th, 2008, would it have made any difference in the end?

It's a bit frightening to contemplate that the answer to the last question might be "no". Particularly because of the support it lends to the rather pervasive view in Irish politics and business that accountability is overrated.

Only those suffering from this ethical myopia will fail to see the connection between such moral ambivalence and the culture that destroyed the banks.

In this context the frankly unexpected decision of the Government to seek the resignation of Colm Doherty and Dan O'Connor and more significantly their decision to accept their responsibility and step down should be acknowledged for the step forward it represents.