Although last week’s two independent reports into the Irish banking crisis – prepared separately by Mr Honohan and international banking experts Klaus Regling and Max Watson – were commissioned as initial reference points for the Government’s planned full-scale investigation, Mr Honohan yesterday expressed reservations concerning the probe.
Addressing the Joint Oireachtas Committee on Finance and Public Service, Mr Honohan said it would be better to park the plan until the idea of a Commission of Investigation was “fully fleshed out”.
He said the commission doesn’t have a clear agenda yet and it would be better postponed rather than entering a process where there is no clear end in sight.
Mr Honohan also said the two reports have answered many questions regarding the Irish banking system’s near collapse.
“I think that we now know a lot more about the dimensions of the crisis on which my report has focused, leaving relatively little to be explored at the factual level by the proposed statutory commission of investigation,” Mr Honohan told yesterday’s committee.
“I believe that clear and unambiguous conclusions have been reached on most of the issues on which I was asked to comment and I feel there will not be any substantial need for further factual investigations regarding the performance of the Central Bank and Financial Regulator in these matters.”
Mr Honohan said there is scope for further hearings and reports, however, and suggested external consultants be employed to review risk management and governance at the banks, AIB and Bank of Ireland particularly.
“I feel that we still don’t know enough about the risk management and decision processes in the major banks, and how they failed to avoid disaster,” he said.
On the question of an investigation into the role of the banks’ auditors and accountants, the Central Bank chief said such a move should be deferred until after more NAMA-bound loans have been purchased; stating that the due diligence for those purchases “seems to have revealed some issues around loan documentation”.
Mr Honohan said NAMA is working well – “the prices paid for the loans reflect a depressed property market and not a covert recapitalisation of the banks” – and proves that the Government’s strategy is moving in the right direction.
He also called for a report into the operations of mortgage intermediaries during the boom period.
Mr Honohan admitted mistakes were made at Anglo’s supervisory level over the risk not being spotted earlier, but added the Central Bank has learnt its lesson and is “putting in place new procedures and arrangements that take account of that”.