Michael McGrath (Cork South Central, Fianna Fail)

I welcome the opportunity to make some brief remarks in support of the Government amendment to the Fine Gael motion on the two preliminary banking inquiry reports. When he came before the Joint Committee on Finance and the Public Service yesterday, Professor Honohan summarised succinctly the main contributory factors that led to the banking crisis. He pointed out the comprehensive failure of bank management and direction to maintain safe and sound banking practices. He referred to the failings of the regulatory approach to contain the breaches of proper banking practice. He highlighted the contributory role of macro-economic and budgetary policies as well.

It is important to point out that the Regling and Watson report emphasised to a significant degree the international factors that contributed to the crisis, including the monetary conditions that prevailed in the eurozone area and the availability of liquidity. They were circumspect in attributing a weighting to the various factors that led to the crisis. Professor Honohan did allocate 75% of the responsibility to domestic factors, but he put those factors in a hierarchy and he made it clear that the primary responsibility Ireland lay with the directors and senior managers of the banks. The secondary contributory factor was the catastrophic failure of the regulatory function, while he also referred to the macro-economic and fiscal policy of the Government as a third factor, "taking the bronze", as the Minister put it.

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