Anglo Irish fallout - Financial Regulator must go

The Government is going to provide €1.5 billion for Anglo Irish Bank and €2bn each for Bank of Ireland and AIB Bank.

The Government will end up holding a clear majority share in Anglo Irish, but this will not be outright nationalisation, though in effective terms it is the same thing.

It amounts to full protection for Anglo Irish Bank, which is likely to cause some public unease, but was necessary to protect innocent people doing business with the bank.

If the bank were allowed to collapse, it would have enormous ramifications for those to whom it lent billions. In the ensuing turmoil many businesses could have been undermined, with possible far-reaching consequences for the whole economy.

Former chairman of Anglo Irish Bank Seán FitzPatrick, juggled €87 million in personal loans to himself between Anglo Irish Bank and Irish Nationwide for eight years in order to deceive the public and the bank’s shareholders.

His behaviour was reprehensible.

What happened exposes blatant deficiencies in our legal system because what was going on amounted to legalised corruption. People at such a high level were effectively telling shareholders at the AGM that they were being careful with the shareholders’ money and treated it as if it was their own.

They were telling the truth, but in a very twisted way. They were acting recklessly, treating the money as if it was theirs to do as they pleased.

Even if others did not share in Mr FitzPatrick’s mysterious business dealings, those who facilitated him with the loans must share both responsibility and culpability. The bank’s chief executive, David Drumm, has already resigned in the wake of the controversy, along with a non-executive director.

The Financial Regulator, Patrick Neary, knew since last January about the juggling of these questionable loans, yet he appears to have behaved with extraordinary complacency. Surely he should have informed the Minister for Finance, especially following the onset of the current financial crisis.

Earlier this year Mr FitzPatrick complained that there was too much regulation in the banking sector in this country, whereas events have clearly shown in his case that there was not nearly enough. Whatever excuses can be made for the regulator not finding out earlier about the fancy financial footwork in relation to the €87m loans, there can be no excuse for his behaviour since last January when he discovered details of the transfers between Anglo Irish Bank and Irish Nationwide.

In the circumstances, the regulator must go, not with a golden handshake but with profound regrets for his failure to comprehend the enormity of the squalid conduct that went on during his watch.