Learning the lessons - Work on new laws must be accelerated

IRISH Nationwide chief executive Michael Fingleton bowed to the inevitable yesterday and announced that he will, after considerable pressure from Finance Minister Brian Lenihan, retire at the end of the month.

Though Mr Lenihan is entitled to feel a degree of satisfaction, especially after he refused to capitulate in the face of earlier defiance by the board of Irish Life & Permanent, he may still look with envy at the powers brought to bear by American authorities yesterday.

Though these powers were used to combat criminality our system would be enhanced if it had the capacity to confront such criminality should it arise.

As Mr Fingleton finally threw in the towel, more or less on his own terms surrendering no more than a e1 million bonus, US authorities seized disgraced financier Bernard Madoff’s Palm Beach mansion, his vintage yacht and a smaller boat, in a bid to recoup assets to compensate investors.

The US Marshals Service arrived at the 8,753-square-foot, five-bedroom Florida mansion just hours after the boats were seized. Authorities planned to enter and secure the mansion, change the locks on the “trophy house” which Palm Beach County records show had a taxable value of about e7 million last year.

Madoff, 70, is in jail in New York awaiting sentencing after he pleaded guilty to swindling billions from investors in what could be the biggest scam in Wall Street history. If it were possible he might face up to 150 years behind bars.

It must be pointed out that Mr Fingleton is not an Irish Bernie Madoff and — just like the vast majority of our bankers — has not been charged with anything much less convicted of the slightest misdemeanour.

In recent months Mr Lenihan, and a good number of his cabinet colleagues, have had to exercise considerable restraint in the face of calls for immediate action against those perceived to have been at the least reckless and possibly dishonourable in how various financial institutions have been run.

The reality is that the Government can only enforce the law as it pertains. They can only pursue someone who seems to have broken the a laws on our statute books, not the laws we wish were on the statute books.

Sailing close to the wind and sinking the boat does not count, you have to break the rules before you feel the hand of the law on your shoulder.

Though Mr Lenihan and his colleagues are right when they say they can only apply the rules as they exist it is a defence that can never be used again. As this week’s London soiree focuses on trying to rejuvenate the world economy there are parallel calls for an international regulatory authority. This, however, is fraught with obvious limitations and raises the possibility of more loopholes than are provided by Irish tax law.

International regulation will never be the silver bullet we need and we must be proactive in our own defence. We must bring in a set of regulations that would make the lunacy of the last decade impossible. These regulations must be far more than persuasive and have the power to properly protect our institutions.

They would have the added effect of rebuilding our squandered reputation and contribute significantly to an economic revival. The excuses are now redundant and the work of building a watertight regulatory frameworks must be accelerated.