A "turf war" was going on between two Government departments who disagreed on the regulation of financial institutions, the DIRT inquiry subcommittee was told yesterday.
The Tanaiste, Ms Harney, and her Department of Enterprise, Trade and Employment favoured a single new regulator.
The Department of Finance, however, wanted a "twinpower" approach, comprising a monetary agency with a separate board, chaired by the Central Bank Governor, and a financial services regulatory authority. Both would be within the overall authority of the Central Bank.
Mr Bernard Durkan TD (FG) said it appeared a turf war had gone on.
Mr John Corcoran, assistant secretary at the Department of Enterprise, Trade and Employment, said the Department and the Tanaiste wanted a new stand-alone regulator for all financial services.
"We have a multiplicity of bodies at the moment regulating financial institutions. We thought there should be just one and that its objective, its brief, should be solely the purpose of regulation," Mr Corcoran said.
He said in their proposals they had followed what the Joint Committee on Finance and the Public Service had said earlier when they had opted for a single new regulator.
"We felt that a radical move like that would restore confidence in the capacity of the public sector to regulate financial institutions," he said. "We felt something radical was required there, given what had happened in the years preceding 1998," he added.
Mr David Doyle, assistant secretary at the Department of Finance, said it was not a turf war between the two departments. There was a difference of emphasis and opinion as to the location of a single regulatory regime. The Department of Enterprise wanted a regulatory regime completely outside the ambit of the Central Bank.
In Finance, they wanted to look at the "twin powers" option where the monetary affairs of the Central Bank - such as attendance at the European Central Bank and decisions on interest rates - would be handled by a monetary agency with a separate board. It would be chaired by the Governor of the Central Bank.
The other power would be a financial services regulatory authority. It would have its own independent board and chairman appointed by the Minister for Finance. The board would have representatives of various interests.
"We see those two twin authorities within the overall ambit of the Central Bank, with a board with equal representation on both sides representing the two authorities and chaired by the governor," Mr Doyle said.
The Central Bank board should be confined to monetary affairs and the regulatory agencies would be completely independent. There would be an overarching liaison committee of some sort, he said.