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

Mr. Neary, in my opening comments today I said that this is the 30th hearing of the banking inquiry. We have had a number of witnesses that have come to us during that period. I would like to quote some of them to you. Professor William Black told the inquiry on 5 February that extreme growth itself is something that should not be allowed by a regulator. We have centuries of experience to tell us this is true and then he went on to say, "The Irish crisis was one of the most easily preventable crises by either competent bankers or competent regulators." On 21 January, Mr. Klaus Regling told the inquiry:

There was this light-touch approach to supervision, not very intrusive, not very assertive and therefore also imposing penalties just did not happen. The rules which existed were applied very loosely.

Professor Alan Ahearne, appearing before the committee on 4 March, said:

They [meaning the regulator] had a certain interpretation of principle-based regulation which meant that they really just looked at whether the banks had certain governance systems in place, including having an audit committee. They put a lot of trust in the senior management of the banks. That is the very opposite of intrusive, proper regulation and so the implementation of regulation failed dismally.

On 11 October ... of February ... or sorry, 11 February, Professor John FitzGerald said:

The build-up of the bubble could have been prevented by appropriate fiscal policy or by appropriate prudential action by the Central Bank and the regulator, or both. Either one of these policy instruments, if appropriately deployed, could probably on its own have prevented the disaster. Both together would have prevented [the] disaster.

And then, when Professor Honohan came before us, discussing his report and where he wrote about the options available to the Financial Regulator on moral suasion, in questions at the inquiry on 15 January, he said:

Moral suasion is useful but is not enough if the regulated entity will not heed ... indication. Moral suasion has nothing to do with morality. It has to do with non-legally binding requests whereby one says, "Please stop doing this, please stop doing that" and if the banks know what is good for them, they say, "Okay, let's behave differently". However, if they do not respond, it has to be followed up with enforcement, strict directives and rules. It in not principles versus rules, [it is] principles and rules.

Mr. Neary, the finger of responsibility would seem to be directly pointed at the office of the regulator in those accounts to the inquiry. Would you care to comment?