Banking meltdown 'home-made' in crucial ways, reports find
Ireland’s banking meltdown was a result of “home-made” decisions rather than the global economic crisis, a damning report by international experts declared today.
Former International Monetary Fund officials investigating the lead-up to the Irish crash said the Government’s Budgets during the boom years left the country vulnerable.
The findings by Klaus Regling and Max Watson, in one of two reports that will inform an official inquiry into the banking crisis, deliver a major blow to Taoiseach Brian Cowen, who was finance minister ahead of the economic nosedive.
The authors of the report said: “Ireland’s banking crisis bears the clear imprint of global influences, yet it was in crucial ways ’home-made’.”
The report found that careful management and supervision of the public finances and banking sector could have helped steer the country towards a "soft landing" when the recession came.
But rather than keeping a tight control on the boom, the Government spent the money – from taxes on property and consumer spending – as it came in with giveaway Budgets.
Along with that, tax cuts left the State coffers in an “increasingly fragile” position, according to the investigation.
“Fiscal policy heightened the vulnerability of the economy,” the experts said.
Mr Regling and Mr Watson said it was clear that bank governance and risk management were weak and “in some cases disastrously so”.
