Anglo fallout sparked banking announcement

It was no accident that the banking inquiry — already well behind schedule and six years on from the banking collapse — was announced by Government yesterday with such haste.

The coalition parties risked getting caught in the crossfire of public anger that erupted after Anglo bankers escaped jail and the former financial regulator — despite damning criticism for his role — was off the hook with a €120,000 a year pension.

The blame was firmly focused, not just on the convicted yet free bank executives themselves, but on the political system that allowed this happen and therefore the establishment parties.

And so the Government had to move swiftly to deflect any rage away from themselves, and to appear to be decisive and on the side of the public.

And so the decision was made at yesterday’s Cabinet meeting to establish an inquiry into the banking collapse that has destroyed the lives of so many people in this country, with a motion to set it up to go before the Dáil next Tuesday.

Once a committee is mandated to handle the inquiry, to be headed by Labour TD, Ciarán Lynch, there will be a period trying to identify who should come in and what they should be asked.

The fact that the issue will be firmly on top of the political agenda next week, with committee discussions beginning soon afterwards, will most certainly have a bearing on the local and European elections in three weeks’ time.

Given its position in Government at the time, the return of the issue to the minds of the electorate is a nightmare scenario for Fianna Fáil.

The discomfort was clear as its leader, Micheál Martin, tried to sidestep questions at the launch of his party’s European election manifesto yesterday, when he was asked if he was embarrassed by the weak oversight and regulation at a time he was in cabinet.

The party’s former leaders and taoisigh Brian Cowen and Bertie Ahern have both stated they are willing to attend the committee hearings.

Their grilling could take place closer to the next general election than the May 23 polling day — meaning it will take Mr Martin longer than he would have hoped to bury the ghost of the party’s past.

Of course, the Government parties themselves are not totally free of risk of being damaged by the forthcoming process.

They will come under the charge of being no different to the last crowd if the electorate feel they are not getting satisfactory answers, if bankers and bureaucrats are getting off the hook or if the inquiries progress is stymied by legal hurdles.

The coalition parties can expect to be accused of taking a partisan approach throughout the process.

They are unlikely to be unable to resist the temptation of using it to remind voters of Fianna Fáil’s past — as the Chief Whip, Paul Kehoe did when introduced rules on the inquiry to the Seanad and asked if the party had “something to hide.”

In the short-term, it appears the big winners could be the anti-establishment and smaller parties. Public confidence in politics is already undermined by what happened at the time of the banking collapse and the subsequent crisis.

This is not helped by this week’s Anglo sentencing and will be further exacerbated by revelations that will emerge during the course of the inquiry.

And with such a fed-up public, candidates offering a “hopey changey” message are likely to strike a chord.

Q: Why is this inquiry going to be held?

A: The Anglo trial put the spotlight on some issues, including the poor regulatory environment in the run up to the banking crisis.

Other issues include what decisions were made in the political and administrative system, and what drove crazy decision-making in banks.

Q: What will the format of the inquiry committee be?

A: It will be a new committee, set up specifically for this task. Its rules are already established in the Inquiries Act, but its terms of reference still have to be decided.

Q: Who will be on it?

A: It is expected to have nine members who will have to attend every meeting, and be chaired by the current chair of the Finance Committee, Labour’s Ciarán Lynch.

Speculation surrounding its make up surrounds Senator Liam Twomey of Fine Gael, Michael McGrath of Fianna Fáil, Pearse Doherty or Mary Lou McDonald from Sinn Féin, and independents Stephen Donnelly and Denis Naughten.

Q: When will it begin?

A: Full hearings are expected to start in late September or early October following an initial scoping exercise.

Q: What events will it examine?

A: That depends on the terms of reference and the scoping exercise. The Government want it to focus on the events leading up to the bank guarantee, which will focus mainly on the Fianna Fáil administration. But Fianna Fáil believe it should be extended to include certain decisions by this Government, like deciding not to burn the bondholders and the liquidation of the bank guarantee.

Ultimately though, this will be decided by the Government majority

Q: So who is likely to be on the witness list?

A: Politicians, regulator, civil servants and administrators that might have anything to do with the run up to the banking collapse.

Former Fianna Fáil taoisigh, Brian Cowen and Bertie Ahern, will appear.

But all eyes will be on the former regulator, Patrick Neary who came in for scathing criticism from the judge in the Anglo case.

Q: What if they refuse to appear:

A: Section 15 of the Inquiries Act say that the committee will have “the same powers as the same privileges and immunities as a witness giving evidence to the High Court”. But this may be challenged.

Q: How long it will it take?

A: There is speculation that it could run up to two years, but no one in Government is putting a timeline on it, saying that is a matter for the committee itself once it is established.

There will be a number of reports as each section is concluded.

Q: Will it just turn into a political bun fight?

A: If Dáil and Seanad discussions to date are anything to go by then yes it will. But the legislation also has a set of rules about “fair procedures” to be followed by the committee.

Q: So what will happen when it is over?

A: Nothing much, as no sanctions will flow from the inquiry. But it is hoped the public will have a better view of all the facts to make their own judgements. Whether the politicians decide to take any legal changes or policy changes on foot of the lessons learned remains to be seen.