ECB rules out appearing before banking inquiry

The European Central Bank has ruled out sending an official or appearing before the Oireachtas banking inquiry as it prepares to begin hearings today.

Inquiry chairman Ciarán Lynch said he was “disappointed” with Frankfurt’s decision, but he added: “We still anticipate that the ECB will assist the committee in providing any information we may request.”

ECB president Mario Draghi told Mr Lynch by letter the bank was “primarily” held to account by the European parliament, adding: “Against this background, the ECB does not see itself in a position to participate in inquiries conducted by national parliaments and will therefor not appoint a dedicated contact person.”

Mr Draghi also said the ECB had put documents on its website, including the Lenihan letters.

The ECB refusal comes after a key member yesterday said the inquiry would produce no “earth-shattering” conclusions and is unlikely to find any fault with anybody, but it will be an exercise of democratic accountability.

Michael McGrath, the Fianna Fáil finance spokesman, said members’ hands were tied due to legal restraints but politicians would still do their best.

The inquiry will today hear from Finnish academic, Peter Nyberg, whose inquiry concluded that ‘group think’ among institutions was largely to blame for the financial crash.

Mr McGrath said the inquiry was a “litmus test” for the Oireachtas to show that politicians could be objective and fair. He said its success would be if it concluded its work before a general election

The inquiry will also hear tomorrow from Rob Wright, the Canadian finance expert, who authored a report into the Department of Finance. It revealed that officials had warned the Bertie Ahern government of its policies during the boom years but was regularly ignored.”

Banking Q&A

Will the inquiry have the ability to grill bankers and politicians and get to the bottom of the financial crash?

Probing TDs are severely restricted by the 2002 court Abbeylara ruling which prevents Oireachtas members from making findings of adverse fact against anyone.

Questioning will be vetted and some believe that witnesses, particularly bankers, will contest certain lines of investigation.

A lot of work has already been carried out by experts previously into the banking collapse, including by academic Peter Nyberg and former Canadian finance chief, Rob Wright.

The real test will come next year.

Whether TDs can get regulators, bankers, and politicians to fully account for what happened in the lead up to the September 2008 banking guarantee remains to be seen.

Ultimately though, the probe is restricted in that it can make no adverse findings.

Its founders think its benefit will be in providing the Irish people with a clear “narrative” about how the financial crash occurred.

Why has it taken so long to get the investigation going?

The probe was suggested as far back as in Labour’s general election manifesto in 2011.

Its delay is partially to do with ongoing court cases against individuals, including from Anglo Irish Bank.

As long ago as two years ago, Oireachtas officials were undecided about whether an independent committee would lead the inquiry or whether the high-profile Public Accounts Committee would take on the role.

The Coalition’s plans were also shot down when the people rejected the Oireachtas Inquiries referendum in 2001, which would have given Oireachtas members tougher powers to make findings of fact against individuals.

This was a serious setback and for a while any probe looked off the agenda.

The inquiry now only has a year to do its work after committing to produce a final report by next November.

This is on the basis that no early general election is called before then.

Who and what can we expect to see at the inquiry over the coming months?

The first few hearings are expected to set the background to the banking collapse and financial crash and set the context around why decisions were made by departments, bankers and regulators.

This will last up until March. By April, the inquiry will move into another phase where it will hear from bankers, regulators and those in the central bank.

Later, TDs and senators will hear from former Taoisigh and other key politicians who made decisions.

It remains to be seen to what extent the European Central Bank will co-operate with any hearings.

The most important public hearings will be between April and July.

This is also when the public will most likely have interest in following the probe, especially when former senior politicians attend hearings.