Dysfunctional banks - It’s time to take the gloves off

THE glow of optimism, determination and possibility encouraged by Taoiseach Brian Cowen’s welcome speech last week has not lasted too long. How could it

Any feelgood sentiment created by his belated call to arms has been swept aside by the allegation that Anglo Irish Bank and Irish Life & Permanent colluded to strengthen Anglo’s balance sheet by depositing up to €7 billion in the struggling bank just before the bank’s financial year ended.

This figure, it is believed, included a lodgment of €4 billion just hours after the Government bank deposits guarantee scheme was announced.

If that kind of three-card-trick banking was not enough to make a good man kick his dog, the news that financial regulator Pat Neary, who “retired” early because of failures within his office, got a €630,000 golden handshake may.

Mr Neary got a special €202,000 payoff, plus a retirement lump sum of €428,000 As well as that he will receive an pension of €142,670 a year.

Remember, this is the man — our trusted keeper of the gate — who had to be told by Finance Minister Brian Lenihan that disgraced Anglo Irish chief Sean FitzPatrick had concealed loans of at least €87m from his shareholders. The loans were moved from the Anglo balance sheet each year to Irish Nationwide so they would not appear in annual reports.

Remember, Mr Neary’s early retirement is supposed to represent some sort of censure, some expression of dissatisfaction with how a job was done. What did Mr Neary get? Financial security for life and a chance to put his feet up earlier than he had planned. That all of our failures should be so handsomely rewarded.

Taken in the context of a society that expects to see 400,000 people out of work before the end of the year, the figures are, to say the very least, enviable.

However, what is really wrong and unacceptable about it is that it shows that we are not serious about regulation; that we do not mean what we say.

How could we argue that we do when we so handsomely reward an individual entrusted with this grave responsibility despite a litany of failure, failures with such terrible consequences?

Mr Neary’s situation is not unique — remember Fás boss Rody Molloy — however, it is just a symptom of the malaise that afflicts this forlorn country.

The cancer that is eating at its very heart is represented by the bankers who, with imperial impunity, follow a code of morality unrecognised by the rest of us.

Under Mr FitzPatrick’s stewardship Anglo Irish Bank colluded with Irish Nationwide to hide loans of at least €87 million. He deceived shareholders and anyone considering investment decisions based on accounts.

Yesterday, we learnt that Anglo is being investigated to see if it artificially enhanced its balance sheet in a shabby two-hander with Irish Life & Permanent. If this was done to convince potential investors that Anglo was a far better bet than it actually was, it was tantamount to fraud and we cannot be surprised that Ireland has been described a the “wild west” of European finance.

Neither can we be surprised that Ireland’s reputation in the international investment community is worth little more than a few dog-eared shares in an Irish bank.

As the Government prepares to invest billions in this dysfunctional system, we cannot be surprised if we are left to wallow in the bed of our own making by those who control international investment funds.

Already this perception of Ireland Inc has had a negative impact on our Government’s credit rating. Once the golden-haired boy of the EU, we are now regarded as the neighbours from hell, blind to our own faults and reluctant to change our ways despite the obvious and awful consequences of our inaction.

And all this because a few bankers took a mile when they were given an inch by the newly embraced culture of soft regulation so recently championed by seduced and enthralled politicians; so spectacularly abused by the greedy and amoral people at the centre of these controversies. Elsewhere on this page, former Government minister and businessman Ivan Yates, a man not given to hysteria or hyperbole, warns of “a series of industrial disputes in the public sector (that) could paralyse the nation”. “Violent protest and rampant crime cannot be ruled out,” he cautions.

These are unsettling predictions in an unsettling time that increasingly call for measures that not so long ago would have been unthinkable. One of those could be the seizure of all of the private assets of the central players in this outrage, one that borders on treason, until it is decided whether their actions were just amoral or criminal. We’re in a fight for survival and it’s time to take the gloves off.