THE NYBERG report published yesterday is surprisingly light on figures and rather heavy on psychology for something that endeavours to explain the collapse of a banking system. References to mania, groupthink and herding are as frequent as those to funding and market share. The author has invoked these and other sociological concepts in an attempt to arrive at an explanation for how the whole of the Irish banking crisis was so much greater than the sum of its parts.
He concludes that in order for a systemic financial crisis such that which has gripped Ireland to occur, numerous things have to go wrong and go wrong at the same time. Households and investors have to get it wrong. The banks have to get it wrong; the regulators have to get wrong and Government have to get it wrong. The media also have to get it wrong.
In Ireland, in the years running up to 2008, all these things happened. The catalysts in Mr Nyberg’s view was a “national speculative mania” centred on the sale and acquisition of property. It was, he believes, a uniquely Irish mania and at its heart was a failure by those who should have called a halt to see the problem and, more damningly, a failure by those who saw the problem to speak out; be they on the boards of banks, in Government buildings or elsewhere. Nobody shouted stop.
The report paints a picture of Ireland that that we may find uncomfortable but that, in truth, is all too easily recognisable. Our refusal as a society to confront what is staring us in the face is the fatal flaw that links the banking crisis to the Moriarty tribunal and the Ryan report.
The rather subtle conclusion that Mr Nyberg has arrived at – that we are all responsible to a greater or lesser extent for the mess in which we find ourselves – will not satisfy everyone. If the public outrage at the revelation that AIB’s outgoing managing director was paid €3 million is any guide they may prefer to turn it on its head. We are all guilty but some are more guilty than others. This in turn will increase the pressure for individuals to be publicly held to account.
This Government would appear to have anticipated this finding in framing its response to the report. The Minister for Finance said yesterday that more heads are set to roll at the banks and a referendum to bring back investigative hearings by Oireachtas Committees is planned. These should be much more than good political theatre. It it is worth remembering that the last Oireachtas investigation of this nature was the very valuable Dirt inquiry – before a constitutional challenge to the Abbeylara inquiry stopped them in their tracks.
With hindsight the many flaws in the Irish banking and political system – which manifested themselves which such catastrophic effect – were revealed at the Dirt inquiry. But there was little appetite to tackle them compared to the enthusiasm shown now for public accountability. There will be no lessons learned if the collapse of the banking system results only in the pillorying of bank executives. The whole edifice of allegedly independent oversight failed – and failed miserably.