Pressure grows to hold banking inquiry

Pressure is growing for an inquiry into the banking collapse amid outcry over revelations that executives at Anglo Irish Bank lied about the scale of the crisis at the bank at a critical time when the then government was deciding how to intervene.

Enda Kenny said he understood the anger and rage felt by the public at the bank’s behaviour as revealed on a leaked telephone recording, and vowed to pass legislation within weeks enabling the establishment of an Oireachtas inquiry.

Eamon Gilmore said he was “shocked” by the content of the conversation recorded in Sept 2008 and also stressed the Government’s commitment to holding formal hearings.

“What we have seen and heard underlines the necessity for there to be an inquiry into what happened prior to the bank guarantee, about who said what to whom, about who was influencing whom, about how very key and damaging decisions from the point of view of the country were made,” he said.

However, any inquiry will face legal and practical difficulties, chief among them the fear of prejudicing the criminal trials of three former Anglo executives who are due to face court next year, and the possibility of interfering with other prosecutions that might arise.

Government and opposition parties are already at loggerheads, with Fianna Fáil saying the recording shows the party was misled into giving the ruinous bank guarantee in Sept 2008 and Fine Gael accusing it of using the tapes to wash its hands of responsibility for its failings at the time.

The leaked phone recording discussing a meeting between Anglo, the Central Bank and the financial regulator, show the bank deliberately underestimated how much of a bailout it would need so as not to reveal “the enormity of it up front”.

A senior executive, John Bowe, is heard telling a colleague, Peter Fitzgerald: “The strategy here is you pull them in, you get them to write a big cheque and they have to keep, they have to support their money.”

The recording also reveals that the bank had no intention of paying back the money, despite presenting it as a request for a bridging loan to cover a short-term liquidity issue. The request was for €7bn — the ultimate cost of bailing out Anglo will be more than four times that amount.

The conversation took place on Sept 18, 2008, the same day that executives from Anglo made a private slide presentation to the Department of Finance, boasting of its strong loan book, its strict and secure lending policy and its strong cash flows. It said there was “no requirement for external equity capital”.

“The bank continues to be highly profitable,” the presentation stated, although it had to be nationalised less than four months later.

Both Mr Bowe and Mr Fitzgerald issued statements denying any strategy to mislead the Central Bank and financial regulator despite their acknowledgment on the tape that the full story of the bank’s position and intentions was not being told.

Neither the Central Bank and financial regulator, which are now merged, nor the Office of the Director of Corporate Enforcement would comment last night.