ECB not concerned with banking probe: Honohan

The European Central Bank is not “overly concerned about the Irish situation” and its members have little or no interest in participating in the banking inquiry despite repeated requests for them to do so.

Central Bank governor Patrick Honohan — who is a member of the ECB’s governing council — revealed that its other members had pretty much told him to forget about them having any involvement in the inquiry which is intended to shed some light on events in the lead-up to the banking collapse in 2008.

Mr Honohan, who was appearing in front of the Oireachtas finance committee, said he had chosen to keep out of the issue and initially claimed he had no view as to whether a representative of the ECB should appear before the inquiry or not.

“I haven’t participated, I felt that it’s up to the rest of them what they want to do and I gather they’re not minded to attend, that’s the latest I’ve heard. I’ve chosen to stay quiet on this issue, honestly. Why? Because what’s the point in my saying: ‘Ah go on, you should go’? Should I tell them to come or not to come?

“On an issue like this, they’re going to make up their minds on the basis of their position vis-á-vis all national governments — they’re not really concerned about the Irish situation,” Mr Honohan said.

When asked if other members of the governing council — which is comprised of the governors of the 18 eurozone countries’ central banks as well as six members of the bank’s executive board — had told Mr Honohan he could forget about them going to Dublin, he replied it was “more or less like that”.

Earlier this week, it was reported that the chair of the finance committee, Fine Gael TD, Dr Liam Twomey, had written to ECB president Mario Draghi requesting that an ECB representative appear at the inquiry after Mr Draghi indicated last week he would not formally participate.

Recently published correspondence between Mr Draghi’s predecessor, Jean-Claude Trichet and then-finance minster, Brian Lenihan show the ECB told Ireland it would cut emergency funding if it did not accept a bailout in November 2010.

Mr Honohan also admitted at the committee hearing that the proposed new mortgage rules that cap loan-to-value limits at 80% of the value would make it harder for first-time buyers to get a home, but claimed that it was a relatively good time to introduce such measures which, he said, were aimed at preventing a credit-driven bubble and would affect “a relatively small number of people”.

He also warned against making credit easily available as a means of reducing inequality and urged caution with regard to mortgage insurance — both State-backed and private. The Government, earlier this year, announced plans for a mortgage insurance scheme whereby a portion of first-time buyers’ mortgages would be state guaranteed.


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