Cowen let bankers ‘write their own rules’

BANKERS were given the green light by Brian Cowen to write their own rules when he was finance minister, Labour last night said.

Eamon Gilmore again tried to personally blame Mr Cowen for the banking crisis by claiming the Taoiseach insisted on light-touch regulation of the financial sector.

The Labour leader pointed to the setting-up of a financial forum two and a half years ago on which bankers were invited to be advisers, as proof that Mr Cowen ceded too much power to others.

The Advisory Forum on Financial Legislation was launched to draft laws on modernising fiscal regulation, but was wound up last year as the system of light-touch controls was being blamed for Ireland’s banking crisis.

“You brought in bankers to draft legislation on banking, to write their own rules,” Mr Gilmore told the Taoiseach in heated Dáil exchanges. “You gave them a brief, you now say light-touch regulation was something of the past. You gave them a brief to prepare light-touch regulation.

“The problem is you say you heard nothing, you saw nothing, you’re going to admit nothing, you’ve learned nothing and you certainly have changed nothing,” he added.

Mr Cowen strongly rejected the claims, pointing to similar work now being done by Financial Regulator Matthew Elderfield and Central Bank governor Patrick Honohan, who are consulting with banks on new corporate governance rules.

“It doesn’t mean that they’re beholden to the industry, it means that they’re listening to people to see if there are practical issues to make sure that the best practice possible is applied, that it will be effective and it will work.

“That isn’t regarded as something that shouldn’t be done. But yet you (Mr Gilmore) suggest the same process dealt with in the past was in some way nefarious,” Mr Cowen said.

Mr Gilmore then insisted a “golden circle” was still operating in the financial sector. He said that Ernst and Young, now appointed to Irish Nationwide as forensic accountants, were the same firm drafted in to audit the now-nationalised Anglo Irish Bank.

“What’s going to happen here Taoiseach when they come to forensically examine the loans that were transferred by Sean FitzPatrick from Anglo to Irish Nationwide? And when they come to forensically examine what role did the auditors play in that process.

“There’s a clear conflict of interest. The difficulty is we’re back to the same old people in the inside track, and the golden circle are still being re-appointed to examine themselves.”