Former financial regulator blames ‘the system’ for crash

Former financial regulator Patrick Neary has pointed the “finger of responsibility” at government, the Central Bank, financial institutions, the ESRI, and Europe for what politicians have said was his own failure to do his job.

Former financial regulator blames ‘the system’ for crash

Mr Neary made the remarks during an eight-hour meeting with the Oireachtas Banking Inquiry in which he admitted not enough was done to prevent the economic crash and Ireland’s resulting bankruptcy.

Mr Neary said he was “deeply sorry” for “system” mistakes that ultimately cost taxpayers €64bn.

However, despite admitting that he “misjudged the risk”, Mr Neary, who retired in early 2009 on a €143,000 a year pension and €630,000 pay-off, said others are to blame.

In a 15-minute initial statement, he listed measures he instigated to safeguard the economy including higher capital and liquidity requirements for banks and new impaired loans rules.

He said that Ireland’s regulatory system, which has since been overhauled in an EU-wide move, was “the same or better” than anywhere else.

After inquiry chair Ciarán Lynch suggested the reality is the “finger of responsibility” for not flagging the crash was pointed at him, Mr Neary said “banks were best placed” to “know what they were doing” and he “trusted” and “relied” on their stress tests, adding his views were also based on “benign” Central Bank and ESRI “soft-landing” predictions.

He said under EU rules, he could “not conceive” a way to “interfere” in the bank-client relationship, but did send letters.

He also rejected claims he had an “extremely cosy” relationship with senior bankers after it emerged former Anglo Irish Bank CEO David Drumm “informally” met him to tease out what he knew about businessman Seán Quinn’s mounting debts .

After Independent senator Sean Barrett told Mr Neary “you are to blame”, an exasperated Labour senator Susan O’Keeffe said “you’ve apologised but I’m not sure what for”.

Socialist Party TD Joe Higgins said “throughout the 2000s, the banks were showering loans like ticker tape” and developers were “clattering about in their helicopters”, claiming the watchdog should have been “alarmed to the core”.

However, Mr Neary insisted had the “soft landing” predictions been fulfilled, “there would not have been a banking crisis”.

Mr Neary also said he told then taoiseach Brian Cowen all banks were “solvent” on the night of the September 29, 2008, bank guarantee.

Economist David McWilliams yesterday told RTÉ radio Mr Neary was “the worst financial regulator the world has ever seen”.

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