New regulator system branded a ‘red herring’

THE Government has moved to restore the country’s financial reputation with the announcement of a new system of regulation that the opposition has dismissed as “a red herring”.

The Central Bank of Ireland Commission will replace the boards of the Central Bank and the Financial Regulator under the plan, which had been flagged in April’s emergency budget.

Finance Minister Brian Lenihan said legislation will ensure the new structures are more accountable to the Oireachtas and to “strengthen evaluation and quality assurance of regulatory performance”.

Mr Lenihan said: “The government is taking the necessary measures to allow the domestic banking sector to service effectively the needs of the real economy and to restore the reputation of the country as a sound and secure centre of excellence in international financial services.”

He said the new structures “will ensure Ireland is regulated to the best EU and international standards”.

Labour Party spokeswoman on Finance, Joan Burton, said the new regime regulatory “appears to be taking shape along the lines of the Banking Commission proposed by the Labour Party in February of this year”.

She said: “Shuffling the deck at the Central Bank will not be enough to restore Ireland’s damaged reputation. We need an assurance from the minister that the era of light-touch regulation is over. It is this reckless approach, promoted by successive Fianna Fáil governments, that contributed more than any other factor to the property bust and the subsequent economic crash.”

Fine Gael finance spokesman Richard Bruton said the minister should be bringing in new faces and a fresh culture instead of tinkering with institutional architecture.

“Ireland’s catastrophic regulatory failure had very little to do with the institutional architecture of the existing system, which Brian Lenihan is now proposing to overhaul,” he said.

“But it had a lot to do with the failures of the Fianna Fáil government, the Financial Regulator, and key individuals to prevent the banks from making risky and reckless decisions. This culture was evident at all levels of the political and regulatory system and is embedded in many of the key personnel,” Mr Bruton added.