Banking Inquiry welcomes 'positive signals' from ECB

Banking Inquiry welcomes 'positive signals' from ECB
Mario Draghi

The Oireachtas Banking Inquiry is welcoming "positive signals" from the European Central Bank that it will co-operate with the Inquiry.

In a virtual U-turn, Jean-Claude Trichet insists he is legally barred from being grilled at a parliamentary inquiry over his role during the financial meltdown but is open to assisting it.

Central to it will be the tone and content of letters sent by the former president of the European Central Bank (ECB) to the late Brian Lenihan in 2010 which threatened to cut off essential emergency funding for Irish banks unless the government agreed to a bailout.

Ireland took loans worth €67.5bn from the ECB, European Union and International Monetary Fund a week after the final demand.

In a letter to the Oireachtas Banking Inquiry, Taoiseach Enda Kenny revealed he held meetings with Mr Trichet and current ECB chief Mario Draghi over their refusal to attend the hearings in Dublin.

The pair have been advised they cannot legally be questioned by a national parliament.

Mr Kenny said Mr Trichet has offered to attend a European Parliament meeting in Brussels where Irish MEPs could ask questions or that he would accept an invite from an appropriate Irish institution or third party in Dublin to field questions.

Chairman of the banking inquiry Ciaran Lynch said the ECB has not replied to its own requests for support.

“Nevertheless, this is welcome as it indicates a positive progression from the ECB’s previous position. We welcome this latest move and the positive signals from the ECB to engage and assist the Committee in our work,” he said.

“I have always said that this is not about individuals or personalities but about the information that the ECB would make available to the committee to assist us in our work.”

It is understood Mr Draghi is also considering how he can assist the inquiry without appearing to be answerable to the Dublin parliament.

Mr Lynch said the committee wants to clarify the ECB’s position during the banking crisis from the September 2008 €440bn blanket guarantee of all deposits and borrowings of the main banks up to the 2010 bailout.

He added: “Many pieces of the jigsaw of the financial crisis remain to be put in place, for example, the two years and two month period between the time of the guarantee up to the entry into the bailout programme and what engagement or role the ECB had with the Irish State during this time.”

At one of the inquiry’s public hearings last week Governor of the Central Bank of Ireland Patrick Honohan was pressed on a reported voicemail left by an ECB chief on the late Mr Lenihan’s mobile three days before the guarantee was signed which allegedly warned him to “save your banks at all cost”.

The professor said he spoke to Mr Trichet about the allegation, who told him: “I spoke to the Irish the same as I spoke to everyone, there is no system, you must have responsibility for your own banks.”

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