Only a Dáil banking inquiry can give us the truth and nothing but the truth

SHOULD there be a banking inquiry? Yes, of course there should. In fact there must be one. Should it be conducted in parliament? Yes, absolutely. We need to know what happened and how it happened — both within the banks, between the banks and the authorities, and within government. Only a parliamentary inquiry can be as revealing as we need — I’ll tell you why in a minute.

The banking collapse, the bank guarantee, and the bailout are all inextricably linked. All the key decisions, right and wrong, took place behind closed doors, sometimes, literally, in the dead of night. We have never been properly told how we got into that mess — and there isn’t the slightest indication that anyone has learned any lessons from it.

But Peter Nyberg, it seems, doesn’t believe in the necessity of an inquiry. His report, he seems to feel, answers all the questions. Have you read it? It’s not hard — there’s lots of technical stuff in the middle, but it’s pretty clear. By the time you get to the end of it, you have a pretty clear idea what FR did and why, how DoF managed things, the role played by CB in terms of oversight and the different role played by CFD, ELA, FSAP and other instruments as the crisis developed.

In short, you’ll be as clear as mud. The Nyberg inquiry, one of two substantive and independent inquiries held so far into the collapse of the banking sector, was conducted entirely on the basis of anonymity. Nobody’s named in the report, and there’s a widespread use of acronyms to describe key and influential decision-makers. Unless you’re an insider, you have to keep flicking backwards and forwards to the page where the acronyms are explained.

The findings are expressed in cool, careful language. They’re hard-hitting enough, but they’re so generalised it’s almost impossible to get a real true sense of how it all happened.The same thing is true of the other “official” report, prepared by Patrick Honohan, the Governor of the Central Bank. Again, 136 pages of detailed analysis and commentary, but it adds up to the same thing. It’s as if the message from both reports is “if you could only read between the lines, like us insiders can, and if we weren’t constrained by all sorts of diplomatic niceties, you’d all know what really went on”.

At the end of the Honohan Report, there’s a fascinating “timeline” of the crisis — starting in the US at the end of 2007 with the Bear Sterns crisis, and ending in November 2008. That’s nearly two years before the bailout. For most of that two years, the then government maintained that they were entirely on top of the situation, that the corner had been turned, that Ireland was capable of maintaining its own affairs. Clearly, not all questions have been answered — or even asked — in relation to this period. But in relation to the banking crisis itself, here’s a couple of paragraphs, the first from Honohan and the second from Nyberg, that give a pretty decent flavour of their approach.

Honohan first: “The decision not to proceed with nationalisation of Anglo Irish Bank on 29/30 September has become the subject of considerable public debate and controversy. Two questions are raised. First, should policymakers have had a greater sense that Anglo was facing not only a liquidity, but also a potential solvency problem? The answer is probably yes. Second, would nationalisation of Anglo on 30 September compared with its nationalisation five months later ? have made a significant difference to the overall cost of the bank bail out to the taxpayer? Here the answer is probably not.”

Now Nyberg: “The Commission therefore has reluctantly come to the conclusion that at least some of the financial market professionals at the time must have entertained private, undisclosed doubts on the sustainability of banks’ lending and funding policies. However, for various reasons “the dance had to go on”. Similarly, it seems likely that the public and private watchdogs remained less active than required, not only because they did not know, but also because it was not publicly acceptable, legally necessary or prudent to act at the time.”

There was of course, a third, much shorter report, commissioned by Brian Lenihan and prepared by Klaus Regling and Max Watson. It was essentially a report into whether or not a further enquiry was needed. It’s short, it’s clear, and it ends with these words — “Both strands of the reassessment suggested above — policy review and formal investigation – now need to be pursued rapidly. This is important in order to identify lessons for policy in the future. It is also crucial in order to “clear the air,” and thus bring public debate on the Irish banking crisis to closure.”

I have to say I’ve been surprised by some of the commentary in recent times deriding the need for a full and proper investigation. But even more surprising has been the widespread assumption that parliament and parliamentarians couldn’t possibly do the job. I heard one distinguished broadcaster recently saying, “they’re all former schoolteachers, for God’s sake! What could they possibly know?” Whenever I hear that kind of thing, I remember Sam Ervin. A US Senator (and a country lawyer, as he liked to call himself), Ervin wasn’t noted for much until he was appointed chair of a committee to examine the possible misdeeds of a hugely powerful figure — Richard M Nixon. Little by little, Ervin’s committee, by doing its research in the background and asking the right questions of witnesses, uncovered the truth behind Watergate.

The work of that committee has passed into history. It succeeded for two reasons. The first was the character of its members, led by Ervin (not their legal training, nor their inquisitorial skill, but their character and determination). They believed passionately that they had to get to the truth, wherever it lay. For the entire duration of the work of the committee, you couldn’t tell from watching them at work who was a Democrat and who a Republican, because they left all partisanship outside the door.

And the second reason they succeeded was television. In Ireland – and it was true in the United States back then – the only way in which the people can be “let in the door” of a fundamentally important enquiry is if it is conducted live on television. That’s the great value of a parliamentary enquiry – uniquely, it can allow us to form our own judgments as it goes on.

A respect for the law, a knowledge of the constitution, an ability to research and ask important questions, and the determination to get at the truth. They’re the qualities we need in our parliamentarians, and I haven’t the slightest doubt that those qualities exist. If there is a temptation to be partisan, or to grandstand, television will find it out immediately. That’s another reason why television is so important. Let our parliament get on with it now. Give them a chance, and let’s all see how they do. We need the truth, the whole truth, and nothing but the truth. Only an inquiry conducted in plain sight of all of us can give us that.