Michael Ahern (Cork East, Fianna Fail)

I commend the Governor of the Central Bank, Professor Patrick Honohan, and Mr. Regling and Mr. Watson on their reports. I propose to refer to statements made at a meeting between the Joint Committee on Finance and the Public Service and Mr. Regling and Mr. Watson on Friday last, at which Mr. Regling stated:

We were asked to consider the sources of the crisis in Ireland. I should clarify at the outset that the mandate to look at the sources of the crisis is not the same as answering the question of who is to blame for the crisis. That is something different. It would be quite easy to blame persons or institutions. It would be easy to say that the Central Bank should have rung the alarm bells earlier and louder. It would be easy to blame supervisors for not taking a more "hands on" approach. It would be easy to blame fiscal policy for being pro-cyclical. It would be easy to blame tax policy for providing the wrong incentives, or to blame bankers for ignoring risks.

All these statements would be correct, but they would miss a very important point. They would be too simple. To get the full picture of the sources of the crisis, one really has to take into account the international context in which the Irish economy operated over the past ten or 20 years. At an international level, we had monetary policies that were too loose, with too much liquidity, and pro-cyclical fiscal policies in many parts of the world. To get the full picture, one also has to take into account that the surveillance in the euro area was insufficient with respect to imbalances or competitive positions. One also has to remember that supervision worldwide was too lax during the period under review.

Later, Mr. Regling stated:

I apologise for being lengthy in outlining the international side but it is important to stress the background against which Irish developments occurred. When I read the newspapers in the past few days, I noted this side was not really picked up. For understandable reasons, everybody focuses on Irish points but to get the full picture one has to understand what happened in the world before looking at Ireland...

I propose to address a number of issues arising from the motion. It notes, for instance, "the conclusion in the Honohan report that the Minister for Finance and his officials exercised influence on the Financial Regulator in 2006 to the effect that a proposed tightening to the quality of governance of bank directors was not implemented". None of the reports mentions names or refers to any Minister for Finance.

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