BUSINESS OPINION:Job losses are painful, but Elderfield is trying to end corporate culture that led to the recession, writes JOHN McMANUS

THE JOB losses announced by Quinn Insurance on Friday cast a somewhat different light on the actions of the Financial Regulator and will most likely mark the end of the honeymoon being enjoyed by the new head of financial regulation, Matthew Elderfield.

Although job losses were pretty much inevitable from the day the administrators were sent into Quinn Insurance, the cost of undoing the damage done to the business by Seán Quinn’s recklessness is now apparent.

But, as with much of what has gone before, Seán Quinn has managed to portray himself as more sinned against than sinning.

The impression still holds in many quarters that if Elderfield had continued to show the extraordinary leniency exhibited towards Quinn by his predecessor, then we would not have been confronted with the prospect of 900 people losing their jobs.

Undoubtedly, if he had been allowed, Quinn would have struggled on, juggling numerous balls in order to keep the show on the road as is the nature of all successful entrepreneurs.

And it is possible – but unlikely – that he might have succeeded. One of his big Anglo Irish Bank-style bets might have paid off; anything is possible.

But what if he had got it wrong once again? What if Quinn Insurance’s solvency problem had just kept on getting bigger? The answer is that eventually, it would have run out of road and the business would have failed spectacularly.

In that situation, the job of pretty much everybody in the company would have been at risk and hundred of thousands of people who thought they had insurance with Quinn would find that it was worthless.

In order to avert that crisis, the Government would have had to mount another fantastically expensive rescue of a private company, the costs of which would have had to be borne by the taxpayer for decades.

We don’t know for certain that such a calamity would have occurred, but it is not the job of a regulator to wait to find out.

Once there is a real risk that something along such lines could occur, it is obvious that the regulator should act before the situation spirals out of control.

That is what the regulator did, but it is little comfort to the people who are now going to lose their jobs.

Standing in their shoes, it seems pretty much a no brainer that the Financial Regulator should have backed off and let Seán Quinn try and keep the show on the road.

It is the difference between the real and abstract.

It’s not much of a trade-off to be told that you are losing your job, but at least you can take some comfort from the fact that the country is being run a little bit better than it was in the past and everyone’s future is a bit more secure as a result.

But, that is the positive point to be taken from the disaster that is Quinn Insurance and it is not as abstract as you might think.

In very crude terms, the decision to call time on the antics of Seán Quinn at Quinn Insurance represents a break with the sort of plutocratic culture – of which poor regulation is only a part – that gave us Anglo Irish Bank, the property boom and ultimately the €85 billion National Asset Management Agency bank bailout.

This was the culture which the regulator gave Seán Quinn a pass for using Quinn Insurance money to make good losses on his catastrophic adventure in Anglo Irish Bank.

The decision to finally call Quinn to account represents a move towards the sort of “does exactly what it says on the tin” regulation which internal and external stakeholders in Ireland can have confidence.

It is only a small step, but if you want to understand why it’s important you should answer the following questions:

Which of these two scenarios outlined above sounds like the way things work in Greece and which one sounds like the way things work in Germany? And which country would you rather be living in right now?

The answer is obvious, assuming you are comfortable with gross oversimplification and national stereotyping.

The reason we have escaped the firestorm that enveloped Greek last week and threatens Portugal and Spain is because of the extremely painful fiscal adjustments made over the past 18 months.

We have convinced the world – for the time being – that we can in fact manage out own affairs in a responsible fashion. We seem more German than Greek.

If we are to get through what is potentially coming down the tracks, we need to keep heading in that direction and that goes for regulation as much as anything else, if not more so.

However, this all comes at a price, which on this occasion is being borne out by the employees of Quinn Insurance.