Govt to back Taoiseach over economic crisis

The Government will table a motion of full confidence in Taoiseach Brian Cowen next week after two highly critical reports gave a damning indictment of his handling of the economy while Finance Minister.

Fine Gael leader Enda Kenny attempted to force the Dáil to hear a motion of no confidence today but was prevented by Ceann Comhairle Seamus Kirk.

“If a similar report was produced for any major company in the land, the chief executive officer would be dismissed forthwith and have to resign,” Mr Kenny said.

The Mayo TD tried to move the motion and force the Government to defend its handling of the economy after international banking and finance experts reported the Irish crisis was a result of homegrown decisions rather than the global economic nosedive.

“I listened this morning to the Minister for Finance who said quite clearly that the Government have to bear primary responsibility,” Mr Kenny said.

“He went on to speak about the socio-political context in which this happened. That socio-political context was generated by the Government within the spires of the Galway tent and that socio-political context was this – that if you said anything, anything about the way the country was moving... you were either guilty of national sabotage our told to go and commit suicide.”

Mr Kenny described the Taoiseach as the chief architect of catastrophic failures of policy that caused recession.

He also accused Mr Cowen of misleading the public over the origins of the banking crisis and subsequent downturn by delivering inappropriate budgets in his latter years in the Department of Finance.

Findings by former International Monetary Fund officials Klaus Regling and Max Watson delivered a major blow to the Taoiseach, who was finance minister ahead of the economic freefall.

In a second damning report, Central Bank governor Patrick Honohan also blames reckless banking chiefs and the financial regulator for being afraid to “spoil the party”.

Despite the criticisms, Tánaiste Mary Coughlan said the Government would not react to Fine Gael’s push for a vote but will lodge its own motion of confidence on Tuesday when the Dáil resumes full business.

Mr Cowen has said he takes full responsibility for his role as former finance minister in the run-up to the crisis and accepted he did not take the right actions to prevent it.

But the Taoiseach refused to shoulder all the blame and insisted many mistakes made were based on fundamentally flawed projections from the Central Bank, the International Monetary Fund (IMF) and the OECD.

Published simultaneously 10 days after being handed to the Government, the two reports will kick-start an official inquiry into the banking crisis to be set up by the end of the month.

In his probe, Prof Honohan said banking chiefs, the Government and the financial services watchdog were responsible for a “credit-fuelled property market and construction frenzy” that was central to the catastrophe.

The failure of investment bank Lehman Brothers was not responsible for the crisis, he found.

Meanwhile, Mr Regling and Mr Watson said alarm bells should have sounded over the property bubble and reckless lending from as far back as 2003.

Their report found that careful management 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 give-away Budgets while tax cuts left the State coffers in an “increasingly fragile” position, according to the investigation.