The members of the banking inquiry, which starts its hearings tomorrow, have the opportunity to do some important work by providing a fuller narrative of the banking and economic collapse and how it was dealt with. To succeed, they will require both luck and good judgment. The first requirement of a successful inquiry will be that it can finish its work.
For this to happen requires, first, that there is no general election next year and second that the inquiry is not subject to lengthy delay due to legal challenges. There is little the inquiry members can do about these risks, apart from seeking to stay within their legislative powers. This is not a clear-cut task as it will be first inquiry to operate under the 2013 legislation.
The Dáil decided to establish the inquiry in May and the fact that it is only now beginning shows that this process is not straightforward. We must hope the committee has done its groundwork well. Its members will be required to give a considerable commitment of time and effort in what will be a crucial test of whether the new legislation is robust. To succeed, the members of the committee must also set aside party political interests.
All will, no doubt, commit to doing so, but with an election in the offing political grandstanding is a risk. There is a responsibility here on committee chairman Ciarán Lynch and on all his colleagues. If they are seen to use the inquiry to position themselves, or their parties, for the next general election, then the credibility of the committee will be seriously damaged.
We already know a lot of what happened, but the inquiry can fill in important gaps. It will be the first time that senior politicians, civil servants, regulators and bankers have been questioned in public about the crisis. Many already answered questions under the cloak of anonymity to the banking inquiry, chaired by former Finnish finance minister Peter Nyberg. Appropriately, he will be the first person from whom the inquiry will hear. The Nyberg report was an excellent and insightful summary of what happened. It did not name names but it outlined very clearly the widespread failures in government, bank boardrooms and in regulation, as well as the “national mania” that led to a grave underestimation of the risks.
In following up on this, the committee will make its own decisions on where to probe, but it may well be wise to concentrate its fire. In particular, we need to know what happened in the bank boardrooms as lending policies loosened and why the Central Bank and Financial Regulator were so ineffective. We also need to know why it took so long to discover the depth of the hole in bank balance sheets and how this influenced the key decisions that government ministers made.
There are important lessons here for the future. And given how much this has cost us all, we have a right to know the story as fully as possible.