Cowen braces for impact of bank reports

THE Government is bracing itself for a torrent of blame as it publishes two reports into the banking crisis, one of which is expected to criticise Brian Cowen’s budgetary policy during the boom.

The preliminary reports will form the basis for a full inquiry into the crisis, and the opposition last night raised the pressure on Mr Cowen to testify publicly at that inquiry. As the political knives were sharpened ahead of the reports’ publication, Fine Gael leader Enda Kenny said Mr Cowen would have to be “publicly accountable” for his actions.

Similarly, Labour deputy leader Joan Burton said the Taoiseach’s response to the reports would “reveal a lot” about Mr Cowen.

She said that, to date, Mr Cowen had chosen to go into “defensive mode” about the policies he adopted as Finance Minister from 2004 to 2008, which critics claim contributed to the overheating of the economy.

“If he maintains that posture after today, it will mean he is unable to learn the lessons of past mistakes and is unworthy of office as Taoiseach,” Ms Burton said.

The opposition is also likely to demand that the full inquiry’s remit include Government decisions since September 2008, including the bank guarantee scheme and Anglo bailout. The reports’ remit stopped at September 2008.

The cabinet met to consider the reports last night, with one Government source saying ministers were bracing themselves for a “very rough week”.

The reports will be used to define the parameters of a commission of inquiry into the crisis, which is expected to conclude its work by the end of the year.

The first report, carried out by international banking experts Klaus Regling and Max Watson, examined the “international, social and macroeconomic policy environment which provided the context” for the crisis.

This report is expected to be critical of some policy adopted at the height of the boom when Mr Cowen was finance minister.

The second report, carried out by Central Bank governor Patrick Honohan, examines the performance of the Central Bank and Financial Regulator up to the end of September 2008.

Mr Honohan became governor in 2009, succeeding John Hurley. The regulator in the period, Patrick Neary, has since stepped down.

Mr Kenny pointed out last night that of the “troika” of finance minister, Central Bank governor and financial regulator in place prior to the crash, only Mr Cowen remains in place.

In May, Mr Cowen admitted that Fianna Fáil governments contributed to the crisis by failing to abolish sooner tax incentives which fuelled the property bubble. But he defended his personal record, saying it was he who finally abolished the incentives in Budget 2006.

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