Banking Inquiry: Sorry seems not be the hardest word to say but rather the hardest one to mean

Contrary to popular belief, what Brian Cowen’s appearance at the banking inquiry demonstrated is that sorry is not the hardest word.

Banking Inquiry: Sorry seems not be the hardest word to say but rather the hardest one to mean

The former taoiseach said it with ease and apparent sincerity before he submitted himself to questioning, a questioning he declared he would address in a non-defensive manner.

But he then went on to outline eight key mistakes he believed contributed to the banking crisis – and took credit for not one of them.

And when members of the inquiry proposed a few more, suggesting he might have played a role, Mr Cowen’s response was indeed non- defensive. In a combative sense, it was offensive.

In his term as finance minister, there was full employment and an under-performing construction industry sparked into life to provide much needed homes for young families and returning emigrants. Ten out of 11 budgets were in surplus, the national debt more than halved, investment in infrastructure soared and the neglected areas of childcare, the old age pension, welfare, and the disability sector all benefitted greatly.

There was a great deal of ambition, hope and aspiration at the time, he said, and it was his mission to spread the prosperity.

“If you are saying, why did I not raise unemployment, reduce economic growth, put the brakes on, I wasn’t prepared to do that.”

Nobody on the committee had said that but they did suggest he might have stopped splurging, using revenues from taxes on property, given it was heading for a historic crash.

Mr Cowen wasn’t having that. “There was no government in the democratic world which was budgeting at the time on the basis that we were going to have the biggest financial crisis since the 1920s,” he argued.

Former taoiseach Brian Cowen pictured arriving to the Bank inquiry in Leinster House Dublin yesterday morning.

But wasn’t Ireland – a small open econony as he repeatedly stressed – particularly vulnerable to international influences?

There were risks, he conceded. There had been a “misjudgement of risk”. But responsibility for that lay elsewhere. “During my time as minister for finance, there was no consensus that we were heading for what ultimately happened.”

The majority of projections he relied on were for continued growth in the economy and a soft landing in the property market: “The Department of Finance did not see its role as second guessing the work and assessments of the Central Bank and Financial Regulator’s office who had specific day-to-day statutory responsibility in this area.”

They presented him with quarterly updates and Financial Stability Reports that said all would be well.

“I had and was given no reason to doubt the economic and financial stability projections contained in these.”

Even Morgan Kelly, the economist who was almost a lone voice in predicting disaster, merely got it less wrong than everyone else, he suggested. Kelly had warned property prices would fall by up to 60% over eight years – the ESRI predicted 15%-20% - but to Mr Cowen, eight years did represent a soft landing.

“Not as soft as we would have liked but it would have given us time to adapt. The problem was we didn’t get eight years. We didn’t get time to adapt.”

But he wasn’t done with the Financial Regulator yet, saying there was a culture of deference in the regulator’s office towards the financial institutions it was supposed to be regulating.

The regulator should also have been much more proactive in tackling the spiralling crisis, he said. “There was certainly reason for the regulator to intervene rather than simply adopt statements warning about 100% mortgages and stuff.”

Interestingly, Mr Cowen had said in his opening remarks: “Nothing I have to say here today should be interpreted as an attempt by me to pass the buck to anyone else.”

It is difficult then to know how to interpret his assessment of the regulator’s role or his comments about bankers, their “fundamental errors” in management, “excessive risk taking”, foolish bonus culture that encouraged only short-term gain, their overdependence on international credit and their “stunning failures of corporate governance”.

He also took a swipe at opposition parties whom, he implied, were implicit in the spending splurge. “I do not recall anyone telling me I was spending too much on old age pensions,” he said.

And he had a go at eurozone monetary policies. “The interest rate was too low for the amount of demand that there was in the economy but there was nothing we could do about that.”

Mr Cowen also took aim at some of the myths surrounding the boom, in particular that he was beholden to property market interests. “That’s simply not true,” he said.

Neither was he cosy with developers, later to be guests of Nama, who frequented the Fianna Fáil tent at the Galway Races, he said.

“You wouldn’t get a winner in that tent never mind anything else,” he added, pointing out that Fianna Fáil was in “constant debt” during this period.

“You are trying to suggest I was a proponent of shadowy practices. I was not,” he complained. “You are setting me up as some sort of quy who is promoting cowboy speculators. I am not. I do not travel in those circles at all.”

He made one concession to the inquiry – that perhaps he, as minister, should have asked more questions. Apart from that minor slip, he was, by his own account, blameless for what happened and maligned in the post-crash analysis.

Sorry is an easy word to say but a lot harder to mean.

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