Ireland's banking system needs to be put back on a stable footing before a formal inquiry into its failure can be established, Minister for Foreign Affairs Micheál Martin has indicated.
Mr Lenihan said this week that while he supported calls for banking inquiry, it should wait until the National Asset Management Agency (Nama) had completed its work and the State’s banks had been recapitalised.
Mr Martin said today he could not give any timeframe for the establishment of an inquiry into the failures of the system prior to the establishment of Nama. He said “in the fullness of time” it would have to be established “how the banking system got it so wrong”.
The Minister said he was supportive of the position of both Taoiseach Brian Cowen and Mr Lenihan that the first thing that must be done, through the establishment of Nama, was “to develop the emergence of clean banks within our country”.
Speaking on RTE's Morning Ireland programme, Mr Martin said: "That will resolve the fundamental issues that the banks are currently experiencing so that we can facilitate the flow of credit back into the real economy."
He said it was a question of “prioritisation, about energy of people and where the actual time and energy of those who are at the coalface of resolving the banking crisis should be”.
Mr Martin said he would personally “have no difficulty” with an inquiry.
“But we do have difficulty with prioritising the steps that need to be taken to resolve the significant issues we have. Don’t just cast away or treat lightly the impact of an inquiry on those currently working at the coalface," he said. "We already know that in the context of Anglo Irish. There are already a whole range of inquiries going on in terms of the banking situation, which, by the way, we want to see bear fruit.”
He said the Director of Corporate Enforcement and others were involved in inquiring into the banking system.
“Our first priority is to get the matter resolved and all the officials in the Department of Finance and the people involved in banking policy and at the coalface within the banks themselves, is understandably and correctly directed at that.
“That has to be the number one priority. It’s not a question of brushing that aside…we know from previous tribunals the extraordinary effort that they take, on those who are either within the various institutions that are being investigated. So there is an issue and a serious fundamental challenge before us on that.”
Mr Martin said it was important to get the banking system onto a "stable and surer footing" than it was in the last 12 months.
“We are going to establish Nama first and we are going to enable clean banking to emerge to enable credit to flow to the economy and to sort out those issues first. But of course we will have to in the fullness of time find out how the banking system got it so wrong because it has such a critical impact on everything, particularly the performance of the economy. Of course we want to find that out and to learn lessons from that.”
Asked if there would be an inquiry and, if so, when that would happen, Mr Martin said: “I don’t have the timeframe [for that]. The Minister for Finance and the Taoiseach will obviously lead on that particular question.
“But I personally would support the view that we do need to sort out the banking situation first and that everybody’s energies should be directed at that. But do not understate the challenges that that in itself entails.”
Questioned whether the Government was in danger of “overselling” the idea that there were currently “green shoots” of recovery in the economy, Mr Martin said there needed to be a “realistic perspective on where we are”.
“I think the Minister for Finance has brought great clarity and focus to the fiscal position and to fiscal policy in the country. Over the last 18 months we have taken very significant strides – difficult and all though they are - in essence, stabilising the fiscal position.
“But that stabilisation in terms of curbing government expenditure and also shoring up the revenue base, will, in time lead to a significant improvement in terms of the deficit over the next three years.”
Mr Martin said there were “very significant challenges ahead” and that we could not become “complacent”.
“The size of the [Exchequer] deficit itself illustrates that point.”