A roundup of key points from the banking reports
REGULATION
Although some initiatives were taken, deference and diffidence on the part of the Central Bank & Financial Services Authority of Ireland led to insufficient decisive action or even clear and pointed warnings. ‘Rocking the boat’ and swimming against the tide of public opinion would have required a particularly strong sense of the independent role of a Central Bank in being prepared to `spoil the party’ and withstand possible strong adverse public reaction.
Honohan on the failure of the Central Bank and Financial Regulator to sound the alarm
LENDING POLICIES
Ireland’s banking exuberance indulged in few of the exotic constructs that caused problems elsewhere. This was a plain vanilla property bubble, compounded by exceptional concentrations of lending for purposes related to property - and notably commercial property
Regling and Watson on the root causes
FISCAL POLICY
The conclusion is that overall fiscal policies were pro-cyclical during most years up to, and including particularly, 2007 thus adding markedly to the overheating of the economy.
Regling and Watson on the Government’s role
OUTSIDE FACTORS
...the weaknesses of Irish banks were not caused by the interruption in the flow of cheap money from abroad. Even before the failure of Lehman Brothers in September 2008, Irish residential property prices had been falling for more than 18 months...it seems clear that at that point Anglo Irish Bank and Irish Nationwide Building Society were well on the road towards insolvency.
Honohan on the international factors
ANGLO
In the case of Anglo Irish Bank, management was seen by at least Financial Regulator staff as perhaps “slick and bucaneering” but not as presenting a large or imminent risk. Although it seemed quite clear to top Financial Regulator decision-makers that senior Anglo figures were well-liked in political circles...there was, until very late in the day, no perceived need to take regulatory action against them.
Honohan on the regulator’s view of Anglo management
MICHAEL FINGLETON
The central managemen tfigure in Irish Nationwide Building Society was seen as an overly dominating figure that needed to be surrounded by a stronger governance structure ... While it was understood by all that he was politically well-connected, the failure to resolve the issue is not attributed by anyone involved to his having a privileged status.
Honohan on former Irish Nationwide managing director