This is an unedited version from my Sunday Times article from May 4, 2014.
This week, the Government announced the establishment of a banking inquiry.
The idea is to take a definitive, conclusive and final shot at identifying the events and the actions that have led to the historically and internationally unprecedented financial crisis that has ravaged our economy, society and the lives of millions of our citizens.
Some would say this was long in coming. But, in reality, we have been here before.
Between 2010 and 2011 we had the Nyberg Report, the Honohan Report and the Regling-Watson Report. All were full of generalist discourse about technical and systemic failures, but contained few specifics. In July 2012 we had the PAC report into the crisis. This set out the framework for the current inquiry, but also fell far short of bringing the matter to a closure.
All of these reports and inquiries suffered from similar problems. They were limited in scope, restricted in terms, covered only sub sets of the crisis history and virtually nothing in terms of the crisis fallout, and were disempowered to deliver conclusions in excess of anodyne academism. None of the reports to-date delivered final definitive answers, named names and specific actions by actual players.
This nation, told to pay for the banks and other domestic and foreign actors’ reckless practices, was never given a chance at establishing impartially and substantively the truth about the causes and the drivers of the crisis.
The Anglo Three trial, concluded this week, served as a logical denouement of the aforementioned processes of obfuscation of the causes of the crisis. It loomed large in public minds as a possible source of closure. Excessively technical in nature, restricted in scope and legalistic in terms of discovery, it naturally fell short of achieving that closure. With this failure, public trust in core institutions of this state has been stretched too thin. Even our public representatives now see the urgent need for some sort of a broadly based, non-partisan and open inquiry.
To be effective, the inquiry must mark a clear-cut departure from the past.
It has to be open and broad. Its remit must cover years prior to the crisis, preferably starting from the regulatory, monetary and market foundations laid out in the late 1990s, reaching beyond the night of the 2008 Guarantee, all the way to today.
The inquiry must cover not only the actions of the banks, but also those of our regulators, supervisors, the Department of Finance, the Department of Taoiseach, the roles played by the IFSC-based institutions and the Social Partners. It must deal with technical issues, such as, amongst others, liquidity rules breaches, macro prudential risks build-up and transmission of risks from Government policies to the banking sector and property lending, investment practices violations, and funding risks.
The inquiry must dig deep into the underlying culture, strategic choices and decision-making in our banking system, broader financial services, and economy and policymaking at large.
It must name key names. It must place responsibility on the shoulders of individuals involved - those still serving and since retired. The inquiry must distinguish and allocate legal, regulatory, professional and ethical responsibilities, identifying not just potential violations of the law and regulations, but also systemic weaknesses in competencies, incentives and performance.
The inquiry must achieve clarity as to the role played by banks auditors, consultants, advisory committees and boards, as well as by banks executives, including mid-ranked professionals, such as economists, risk analysts, and lending managers.
We need to know and understand the roles played by European and potentially US policymakers, organisations and investors in fuelling the credit bubble here in Ireland and in structuring the disastrous fallout from the credit bust.
Ireland paid some 40 percent of the overall cost of the euro area financial crisis. The inquiry at least should tell us, who benefited from these payments and who owes us a refund.
Above all, the inquiry must be robust, open, and reflective of the public appetite for closure. It must leave behind evidential record of errors made, strategies adopted, actions taken, regulatory breaches unaddressed and expert opinions supplied. In other words, it will have to break an entirely new ground in terms of all past inquiries ever conducted in the history of this state.