It wasn’t me. No, no, it wasn’t me. It was the banks, the Central Bank, the ‘system’ — they were to blame for not stopping that unholy mess we now know as the financial crash.
This was the crux of the defence from the man who was meant to be the country’s financial watchdog in the years preceding the economic meltdown.
Patrick Neary, the former financial regulator, pointed his finger at others as member after member of the banking inquiry yesterday tried to unearth the facts
It was breathtaking, but also sickening.
The Kilkenny man was accused of dodging questions, of deflecting the blame on others and of sleeping on the job. At one stage, someone in the public gallery whispered, “I’m thinking of sacrificing a shoe”.
The most the man tasked with protecting the people from the greed of the banks could muster was that he regretted some of his actions, or rather inaction.
He said the regulator’s supervisory powers were not sufficient, the systematic risk to the financial sector was the responsibility of the central bank and that a soft landing had been predicted. “More intrusive regulation” had been needed.
Inquiry chairman Ciarán Lynch pressed the former official with damning statements about his role, made in recent months at the inquiry.
Extreme growth in the banks should not have been allowed by a regulator; there had been light-touch supervision; the regulator had put too much trust in the banks; the build up of a bubble could have been prevented by the central bank and if the banks did not respond, the regulator should have.
Mr Neary’s response was less than enlightening.
There was trust in the banks to conduct their affairs properly but that model “clearly failed,” he admitted.
“We were faced with a pretty straightforward lending crisis. The banks, I believe, with hindsight, should have known what they were doing.”
The banks were to blame for overlending. It was also the system, members were told several times by Mr Neary.
As the hours rolled on and more fingers were pointed and less responsibility accepted, TDs tried to grapple with Mr Neary’s vague answers.
It was not gripping, so much as galling.
Mr Neary was the chief executive of the financial regulatory authority between the years 2006 and 2009, before and during and the crash. Here was the man trusted to regulate, protect consumers and stop wrongdoing. Committee members were told his role was not so much about intervening, but about monitoring to see if guidelines were followed on lending.
So what happened when those guidelines were not just breached but ignored as Dublin became what The New York Times later coined the “wild west of European finance”?
It was the Central Bank who had the responsibility to assess risks, Mr Neary told stunned committee members, whose jaws at this stage were on the floor.
A bank could have lent 25% of its funds to just one individual 32 times over and still be within the law, he said.
Furthermore, Mr Neary told the astonished TDs that it was never his job to interfere with loans between a bank and customer.
It is incredible to think of the debt hanging around the neck of this country, the €64bn poured into the bust banks and to now see the mess that was there when the economy came crashing down.
On the face of Mr Neary’s evidence, it seems there were no sanctions for excessive lending and no laws requiring the regulator to intervene.
Moreover, as we learnt, the regulator’s office itself often concentrated on matters far from relevant to protecting the consumer.
There were the informal meetings between bank executives and officials on the grand seventh floor of central bank building on Dame Street.
Was the relationship between the regulator’s office and the banks a little bit too cosy, Mr Neary was asked?
“I really don’t know what extremely cosy means,” he said. He later defended golf outings with bankers. They involved just coffee and sandwiches, TDs heard.
There was an effort made to promote the regulator as being in a “friendly” location to help attract foreign business and then there were the now-infamous golf balls produced with the regulator’s logo.
The branded golf balls were a “mistake”, said Mr Neary, and “discontinued quickly”. If only he had acted as decisively when the banks were clearly lending beyond their means.
Indeed, when he was asked why no sanctions had been taken against the banks under his tenure, he responded: “It was a matter of conflicting priorities and resources.”
However, the palpable sense of frustration in the committee room eventually boiled over.
Socialist Party leader Joe Higgins laid it to him straight with his colourful but candid flair: “Were you totally at sea in the cut throat world of banking… and out of your depth completely?”
It was the system, stupid, yes the system, we were told again and again.
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