Regulator’s denial of risky lending by banks ‘astonishing’
The regulator, Patrick Neary, was centrally involved in the Government’s decision to bail out the banks.
In an interview on RTÉs Prime Time programme on Thursday night, Mr Neary refused to accept banks were over-exposed to the crumbling property market, and insisted this was not a factor in their near-collapse.
Instead, he argued, the banks simply had a liquidity problem — ie they were no longer able to obtain the routine lines of credit from international banks to fund their day-to-day operations.
Fine Gael deputy leader Richard Bruton expressed incredulity at the regulator’s performance.
“I found it astonishing to hear Patrick Neary say last night that the risky lending of banks and the property market collapse had nothing to do with the current crisis our banking sector is facing,” Mr Bruton said.
“I also found it incredible that he thought that bad lending practices from Irish banks were not part of the problem.
“His insistence that liquidity was the only issue, rather than including bad lending and levels of capitalisation, suggests that the regulator thinks we are largely dealing with a business-as-usual situation.”
Mr Bruton also criticised Mr Neary for failing to spell out what actions the regulator would take to ensure more responsible behaviour by the banks.
Mr Neary would only say work was ongoing on a regulatory framework to ensure “greater accountability and transparency for the taxpayer”.
He glossed over questions about excessive pay for senior bankers, saying only that executive pay was an area that would be “considered” going forward.
Mr Bruton said this was not acceptable, and called on the regulator to get tougher with the banks.
“If the Financial Regulator thinks that there is little wrong with what has gone before, then there is little chance that you can drive forward a new regime of more intrusive oversight,” Mr Bruton said.
“I have genuine concerns that in Irish banking, the regulatory regime has been too slow to act in the past. Now, with the taxpayer guaranteeing deposits, the regulator must adopt a more muscular approach and be quicker to act.”
