Tuesday, January 19, 2010

Economics 20/01/2010: Banking Inquiry

I have three simple points to contribute to all the discussion concerning the Banking Inquiry proposals:
  1. Any Inquiry must be fully public, to the point of live television broadcast of all proceedings. Imagine a case of not one, not two, but six largest hospitals in the nation recording serial acts of systemic malpractice that were to result in some Euro 70 billion worth of damages. Would Mr Cowen call for a closed-doors inquiry?
  2. Any Inquiry must be swift and must lead to convictions and severe punishment of anyone found guilty of malpractice or non-fulfillment of duties (including public officials in charge of regulatory and supervisory functions, should they be found guilty). Imagine a total collapse of six largest bridges in the country at the peak traffic - would Mr Cowen sum up the situation as 'We are where we are, now is not the time to deal with the past'?
  3. Any Inquiry that does not cover Nama and Banks Guarantee scheme will simply fail to deliver full account of the causes and the full extent of the damages caused by the current crisis. This is why I oppose an idea of the 'wise men'-drafted preliminary report to set terms of reference for the second stage inquiry. Given this Cabinet will be selecting the 'wise men', I have serious doubts as to the integrity of the process or the group put in charge of restricting any direction of the future inquiry.
Ireland needs its own Truth & Reconciliation Commission to deal with the systemic failures of our supervisory, regulatory and banking systems. If public operation of such a Commission results in irreparable damage inflicted on our banks - how can one tell? After all, with Anglo at the helm, these banks have already done enough to damage themselves. The price of keeping them alive on artificial respirator of paucity, opacity and public cash is the collapse of public trust in our institutions and in our financial system - a price that is much higher than the withdrawal of all international bond holders from Ireland Inc can ever be.

After all, am I the only person one noticing the complete and total ethical collapse of our social system that takes ordinary folks' money to pay the cost of the full and unlimited guarantee of the (largely) foreign bondholders in Irish banks, while their own deposits are now under the risk of being covered by a limited guarantee up to Euro100K?

1 comment:

patrick1978 said...

Fundamentally the banking inquiry will be a political stunt and prove to be a complete and utter fizzer, there will be no strong recommendations,
or as they say in America Constantin, "passing the buck"