Controlling the banks - Top brass must feel the heat

BRAVE, visionary, radical, decisive, possibly a stroke of genius, very welcome and a masterstroke were some of the enthusiastic endorsements that greeted the Government’s commitment to underpin Irish banks.

The immediate, continuing and positive response of the markets suggest that some investors are reassured. So much so that some decided shares in Irish banks represent value and have invested accordingly.

The neutralising of the immediate threat posed by predatory hedge fund managers, some of whom would have lost millions once Irish banks were secured, is another reason to celebrate if not to cheer loudly.

As an exercise in confidence-building it seems, and hopefully time will confirm this, a masterstroke.

To try to put it in context — if either John McCain or Barack Obama could so immediately and so utterly take control of the agenda; so absolutely change last week’s fatalism to something like this morning’s nascent optimism, America’s presidential election — just five weeks away now — would be a foregone conclusion.

If Gordon Brown had thought of it he would have confirmed his authority and could have saved the British exchequer billions.

Taoiseach Brian Cowen and Finance Minister Brian Lenihan’s achievement seems to be on that scale.

It matters not that it is just one battle in the war for the Irish economy, or just a tiny skirmish in the war for the international banking system.

It matters not that the move was provoked by a depth of desperation unknown in the history of this Republic.

It matters not that this gamble might never have been necessary if government had not dismissed those who insisted that our banking practices were unsustainable. Those who challenged the hear-no-evil, see-no-evil orthodoxy can wear their “naysayers” badge with considerable honour.

Neither does it matter that greed, recklessness and the instincts of pirates replaced social responsibility in some banks. Neither does it matter that the banks showed imperial indifference to how families managed, or how honest businesses survived or even planned growth.

What does matter is this — we must never find ourselves in this position again.

The charge sheet against the banks is more than adequate for government to assert the authority of the common good over the interests of the clique who run these institutions with only two objectives: maximising institutional and personal profits.

Profit is the engine that drives the majority of all that is good about modern democracies but we should not be so enthralled by the principle that we can allow our whole society to be jeopardised by its pursuit.

So many of history’s great conflicts came about when the “rights” of property were exercised without responsibility. Today’s free-range capitalism has got us into this mess and its excesses must be confronted.

The very least the Government must demand for rescuing the banks and their shareholders is a seat on each and every bank board. The very least it must impose is a banking regulator with real and autocratic powers, including firing a bank’s chief executive. The banks have behaved, not for the first time, like poor citizens and must be treated as such. They have treated this society with contempt and must face the consequences.

The Cowen/Lenihan initiative was brave and showed the leadership that has been absent for too long but they need to do more. They must face down the banking executives who put the interests of their own institutions before anything or anyone else. They must show those who betrayed us by gambling with our future that they are replaceable.