Anniversary of banks’ collapse: Are we less vulnerable than in 2008?

It’s a decade since our financial regulators and central bankers were frog-marched into the glare of television studios to reassure a nervous public that our banks were secure.

Despite their best efforts, and because they had been lied to by the banks, they looked more like sleepy marsupials whose hibernation had ended too early, rather than centurion watchdogs capable of keeping out-of-control bankers in check.

In hindsight, that such an unprecedented intervention was considered necessary, that such discreet, conservative figures should engage with the public in such a way, probably exacerbated concerns about our banks.

And so it proved.

On September 15, 2008, American mega-bank Lehman Brothers, with $600bn in assets, filed for bankruptcy.

The dominoes were toppling, causing chaos: Stock prices plummeted, credit flows froze, and markets feared that even larger institutions — from Morgan Stanley to Goldman Sachs and Citigroup — might fail.

Other blue-chip institutions — Bear Stearns and AIG — faced calamity and would have failed but for emergency lending by the Federal Reserve.

In the following weeks, the Royal Bank of Scotland ran up the white flag. US president George W Bush analysed the situation bluntly: “This sucker’s going down.”

Two dates stand out from an Irish perspective: On January 15, 2009, the Irish government said it would take steps, so Anglo Irish could be taken into State ownership.

In November 2010, the then Central Bank chief, Patrick Honohan, incurred the wrath of government for telling the truth when he phoned RTÉ and confirmed, live on air, that preparations were being made to accept a multi-billion euro bailout.

The consequences are very alive today.

Just last October, the Central Bank updated the cost of the €64.6bn bailout and estimated the State’s interest bill has been €12.5bn higher than it might have been since 2008, due to bailing out the banks.

The Central Bank, cheerfully, pointed out that this bill will grow for years to come. Vulture funds, smelling blood, are the new colonisers of our Republic.

Former Central Bank chief, Patrick Honohan

Were these huge sums available, they would transform Finance Minister Paschal Donohoe’s next budget.

At the time, we were warned by one of the main players — then taoiseach Brian Cowen — that anger was not a policy.

It might not have been, but it persists and may well be renewed by the kind of reflection the 10-year anniversary must provoke. And so it should.

There has been no real day of reckoning for those responsible for this carnage.

Indeed, in 2013, then finance minister Michael Noonan reversed a measure introduced by Brian Lenihan, which means banks will not pay corporation tax on profits for decades to come.

Unlike Iceland, population 335,000, where at least 36 bankers were sent to Kviabryggja Prison, a place so remote and bleak that it doesn’t need walls or guard towers, one prison van would be enough to bring all of the convicted Irish bankers to jail.

The phrase rubbing salt into the wound hardly covers it.

Have we learned the lessons, and could it happen again?

Scandalously, we all know the answers.

Is it any wonder it is ever more difficult to believe that democracy is really “government of the people, by the people, for the people”.