Professor Patrick Honohan:

First, I am not going to try to defend the cost of regulation in general. It is an ongoing constant battle. In principle we could always imagine that another person would be very useful to have for regulation and we have increased the staffing a good deal since then. One comparison might suggest it was far more expensive than this or that country while in the same footnote there could be several other examples suggesting it was far less expensive. The committee members can imagine which comparisons are emphasised by the head of financial regulation: the examples that show that it is far less costly than in Hong Kong or somewhere like that.

It is a difficult thing to get right but it is clear that three people looking at Bank of Ireland and Anglo Irish Bank and two people looking at another bank was wholly inadequate. However, many more things than banks are supervised. Ireland has the 15th largest international financial sector in the world. That requires a lot of very routine work on regulation, including approving new directors, approving business models and so forth. It is not only the banks. Very little attention was being given to the banks on prudential matters relative to the IFSC and all of that.