CENTRAL BANK governor Patrick Honohan has said it is hard to understand how the two big Irish banks fell into the trap of running their affairs like Anglo Irish Bank.
Repeating his call for an inquiry into the Irish banking crisis on RTÉ's The Week in Politics,Mr Honohan said such an investigation was necessary for society at large. "There are questions that do remain.
“How could those 200-year-old banks have got caught up in a situation where they could lose so much money? I don’t fully understand why.”
He said he had in the past written about the situation at Anglo Irish and the fact that it had grown so rapidly for 10 years. That of itself should have been a reason for someone to say stop.
“No bank can control their growth at that rate.
“So I think there were good reasons to step in and blow the whistle on that. But it is, nevertheless, hard to understand how other, more experienced banks, would fall into the trap of running along too.”
Mr Honohan said that it was clear there would be some kind of inquiry but the question was how best such an inquiry could be conducted.
“A witch-hunt is no good to anybody. What we want to do is go behind the glib statements that are made about why things happened in the way they did and really try to dig and put the finger on any processes, any structures, in our whole system that really contributed to this.
“I don’t need an inquiry to do my job on a day-to-day basis . . . We know enough about the regulatory holes that are being patched, have been patched, and will continue to be filled with our reformed regulatory structure,” he said.
He added that a forensic inquiry hammering witnesses across a table was not the issue.
The requirement was to get an understanding of what had gone on in society and a lot of professional expertise, including social scientists, should be involved.
Asked if he believed the current investigations into the banks were vigorous enough, he said: “I do. I do think that there are vigorous inquiries going on.
“I think that people are pulling out the stops. I am satisfied that all the information that can be found is being produced by my organisation.
“I know the guards are involved and I don’t think that anybody is trying to slow down this process.”
Mr Honohan said he would expect that in a year or two the banks would not only be strong but confident and at that stage foreign investors would be keen to come and buy the shares that the Government will then have in the banks.
He said it was possible the Government could have a majority stake in the banks for a period: “It could be majority Government ownership. I am not committing to that. Some people are very keen on that, I think it is quite possible.”
Fine Gael MEP Gay Mitchell has strongly endorsed Mr Honohan’s call for an inquiry and proposed that the Dáil should establish a crisis committee to look into the issue.
“The Public Accounts Committee [PAC] is unique because it has the Comptroller and Auditor General available to it. The PAC was particularly successful in the Dirt examination. As a former chair of the PAC I believe this is the committee to carry out such an examination,” said Mr Mitchell.
“Why did the risk system of our banks fail? Did we have sufficient or poor regulation? Why was asset inflation ignored? The findings could help us prevent future catastrophes and identify more clearly the culprits in this crisis,” he added.
