Brian Lenihan Jnr (Dublin West, Fianna Fail)

The authors did not say this should have taken place in the Government; they refer to the supervisory structures. They say bank supervision in Ireland was weak and the response of supervisors to the build-up of risks was not sufficiently hands-on or pre-emptive and was in some cases too mild to make a major impact on the risks.. There was a failure of checks and balances within the banks. The Governor of the Central Bank is also forthright in his conclusions that the failures of regulation stem from a regulatory approach that was excessively deferential and accommodating, insufficiently challenging and not persistent enough. He refers to an under resourced approach to bank supervision that relied on good governance and risk management procedures and neglected quantitative assessment and the need to ensure sufficient capital to absorb the growing property related risks and the unwillingness of the Central Bank to take on board sufficiently the real risk of a looming problem.

The Governor's report shared the view of the other two authors that the macro economic and fiscal policy played a central role in contributing to the crisis. The Governor takes the view that such policies contributed to economic overheating, relying to a clearly unsustainable extent on the construction sector and other transient sources for Government revenue. It is worth noting that Professor Honohan points out that while three quarters of the crisis was homegrown, the primary culprit in the generation of the crisis was the banking sector, the secondary culprits were those in the supervisory system and the Government is in the bronze position in that race.

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