Oireachtas Joint and Select Committees

Thursday, 5 February 2015

Committee of Inquiry into the Banking Crisis

Context Phase

Photo of Ciarán LynchCiarán Lynch (Cork South Central, Labour) | Oireachtas source

We began with a football analogy and you introduced the football team Glasgow Celtic. Glasgow Rangers got itself into trouble because it obeyed some very basic accountancy rules in running a football club and ended up getting itself regulated into a new league. We have a situation where, because a football club becomes insolvent, a very measurable outcome happens. This is football. Bill Shankly might have said it is far more important than life, but banking is certainly a very important factor in life.

In Professor Black's testimony this morning and Professor Kane's testimony the week before, both stated there was £180 billion paid out in fines by American and European banks since 2008. These are banks that are breaching rules and regulations you are setting out. In euro terms, it is in excess of €200 billion. This inquiry is not just about looking at the past; it is about learning from the past. You concentrated on that this morning. It is about focusing going into the future.

In your presentation to the inquiry this morning, you talk about banks that are too big to fail and sanctions that would be applied. I think it was on page 3 of your report. You say that national supervisors were required to review remuneration policies, which are bonuses in laypersons' terms, and to impose sanctions if these policies did not meet the new requirements. You then go on to state that supervisors have obtained enhanced sanctioning powers going into the future, which are more intrusive and so on and so forth.

Are we ever going to arrive at a stage where the Commission will say it will continue with a fine-based system, but it will move into a legislative code which identifies bankers, as Senator O'Keeffe said, as opposed to banking institutions? Would there be strong recommendations in regard to the changes in the criminal code, where we would criminalise some of this behaviour as opposed to the sanction involving fining an institution?

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