Banking reports - Good work undermined by delays

SO, the net tightens. The first two reports into our brush with bankruptcy – ongoing – are direct enough to suggest a new, uncompromised relationship between the Central Bank, Government and banks.

Central Bank governor Prof Patrick Honohan has indicted politicians, bankers and regulators. He lays the blame for our economic collapse at the feet of those who betrayed the great powers and privileges entrusted to them. And they are all Irish.

Coming just weeks after Financial Regulator Matthew Elderfield confronted Quinn Direct, despite great political pressures, Prof Honohan, along with Klaus Regling and Max Watson, have published reports that hopefully indicate a new way of doing things. This unusual directness, in Irish terms at least, this independence of action, may be the silver lining in the cloud that hangs over us all.

The criticism of the policies pursued by Taoiseach Brian Cowen between 2004 and 2008 are so scathing as to make it difficult to even imagine how he might restore his reputation. He should not be too despondent however, as no such possibility remains for Bertie Ahern. So damned is Mr Ahern that in any sane, self-respecting country his presidential ambitions would be quietly but firmly put aside.

Next Tuesday’s Dáil confidence motion in Mr Cowen will be the usual set piece and the usual people will vent the usual indignation before voting in the usual way. This, if all goes according to the usual script, may be dressed up as a victory, if even of the Dunkirk kind, but no matter what happens Prof Honohan’s criticisms cannot be undone.

We might have been foolish to pretend that “party could last for ever”. but as the reports point out the banks and their senior management were something much more sinister. They ignored the principles and practices that had sustained banking as an extremely profitable sector for generations. It might be comforting to believe that greed distracted otherwise reliable people but the malice of forethought described in these reports suggests that we have been guilty of a childlike innocence in imaging we could trust bankers. A consequence is that they must be supervised and regulated like never before.

When this crisis began to break around us politicians, and many others, called for the resignations of bank chiefs and directors implicated in the crisis. They suggested that those responsible had no option but to resign. Some did but others remain active at the highest levels of Irish banking. As do very many of the criticised politicians. Is it too much to expect that they might even consider taking their own advice?

The reports’ publication highlights too the painfully slow pace set by the garda investigation into our banks. As the second anniversary of the banking guarantee peeks over the horizon no one has been charged much less convicted. It is difficult to accept this delay and the process is coming close to losing credibility.

Prof Honohan, Matthew Elderfield, Klaus Regling and Max Watson may represent a breath of fresh air but all their work will stand for nothing unless this process quickly reaches the conclusion we all know it should.