Nyberg kicks up some uncomfortable truths at banking inquiry
The great excavation has begun.
At 9.30am yesterday, 11 parliamentarians, good and true, donned their hard hats, took possession of shovels and got to work, digging up the decaying carcass of the Celtic Tiger.
Welcome to the Oireachtas banking inquiry which is tasked with finding out where it all went wrong. Around the world, similar investigations have long been completed and digested, but sure better late than never if the past can be used to illuminate the future.
Chair of the inquiry, Labour’s Ciaran Lynch, got proceedings under way.
“We will hear from those who were at the helm when [Ireland] ran around and those who were in the engine room,” he said.
Some things haven’t changed. In keeping with the activities being investigated, there is precious little representation from one gender, Susan O’Keeffe being the only woman in attendance.
At last however, after false starts, referendums and forgotten promises, it’s underway. Its powers are restricted. Its focus is the subject of some dispute.
Grandstanding detectors have been installed in the committee room, lest anybody gets an urge to bang tables or shake fists in manufactured anger.
And it will be something of a small miracle if proceedings aren’t abused for party political purposes.
Still, the boys and girl in attendance yesterday looked fully earnest, so for now deserve the benefit of the doubt.
First witness up was Peter Nyberg, the Finn who headed up a commission which compiled a compact and incisive report three years ago into the great fall.
Nyberg is a sober man who brought sober tidings in his report that weren’t that well received. His analysis didn’t converge with the received wisdom that it was all down to a few greedy and reckless individuals.
He spread blame around fairly thinly, but nobody really wanted to hear that. Much of the blame he lay at the door of societal groupthink.
Yesterday, he raked over the report, using the kind of straightforward language that is usually alien to those who inhabit the world of high finance.
One of the main elements was, of course, the bank guarantee.
Here, Nyberg points out that while he does not condone the €400bn guarantee, he does understand how it was arrived at on a night when there was real fears that Anglo Irish might not open the next day, which could in turn, the fear was, have precipitated a run on the other banks.
“From previous periods when decision-makers are faced with that situation what one tends to do is make the safest decision although afterwards it might not seem so wise,” said Nyberg.
“The real mistakes were not made on that night, but made several years before,” he said.
Showing scant regard for one element of received wisdom, Nyberg then got stuck into another. The late Brian Lenihan has often been derided for his comment that “we all partied”, and it was introduced yesterday by both Pearse Doherty and Michael Darcy. Both referred to the Nyberg Report’s contention that most sections of society had, in different ways, benefited from the property bubble.
Nyberg wasn’t for turning. “I still think it’s true that a lot of people in many different ways enjoyed the benefits of the bubble,” he said.
“Employment, public expenditure, prices and the extent of public services … low-cost loans and access to investment property. That doesn’t necessarily mean that they partied but it does mean that in the boom or the bubble, their lives fared much better than otherwise would have.”
He then added a crucial rider. “It is quite true that the costs of the crisis are not necessarily distributed in the same way as the benefits.”
In the cold light of the passage of time, it’s difficult to disagree. There were benefits for everybody in the madness, but those who benefited most, in general, managed to avoid the worst of the pain once reality kicked in.
The questioning was fair to middling, with the most interesting enlightenment the fact that had the Government had its thinking cap on in 2006, it could have begun moving to sort out Anglo Irish in an ordered resolution.
Back then, though, most thought the good times would never end.
Nyberg was a good opener for the inquiry, but there may well be heavier days ahead.
He had no problem coming, but, he replied when asked, he can’t see much new emerging from this process.
Let’s hope that’s something he has got wrong.
