Seán Ó Fearghaíl (Kildare South, Fianna Fail) | Oireachtas source

It is vital that we get an opportunity to understand the workings of the bank credit committees and what level of executive oversight of their work took place. Reports identifying responsibility for bank failures on the part of individuals and not just general systems failures have been prepared in several foreign jurisdictions and could serve as templates for an inquiry in this country.

Fianna Fáil fully acknowledges that the political background to this explosion of credit also needs to be examined, bearing in mind that at no stage, even during the debate on the Central Bank and Financial Services Authority Act 2003, did any political party call for the banks to rein in lending. In fact, at the time, the current Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton said, "IFSRA cannot be expected to ride shotgun with every bank. And banks have deep pockets to resource various wheezes. In the long run, only self-assessment will work, not trying to catch people out." That is very much at variance with what is being said today.

In terms of the role of the Central Bank, we must accept that unlike in other businesses, bank failures inflict widespread economic damage on third parties. That is the reason banks are licensed and regulated. The Honohan and Nyberg reports examined the performance of the Central Bank and the Financial Regulator. They concluded that there were serious failures of regulation and supervision, despite warnings about growing threats to financial stability. There were no calls from the political system to increase regulation or supervision, contrary to the attempts to rewrite history more recently. The Department of Finance was also judged in these reports to have acted in a way that was too little, too late. The reports assigned responsibility to institutions, rather than to individuals.

I wish to refer to the ECB in the little time remaining. Colm McCarthy said "The ECB, under its former president, Jean-Claude Trichet, consistently pursued policies that were helpful to bank creditors and unhelpful to taxpayers and sovereign bondholders." This policy position has now been effectively abandoned, both by eurozone politicians and by the leadership of the ECB. Any future bank rescues would be modelled on the Cypriot example with losses potentially being imposed on unsecured deposits.

All relevant correspondence between the Irish authorities and the ECB should be released to the inquiry. In addition, it would be appropriate for former ECB president, Jean-Claude Trichet, to appear before the inquiry to explain why the ECB set its face against the imposition of losses on senior bondholders, including unsecured, unguaranteed bondholders in Anglo Irish Bank and Irish Nationwide even after the decision had been taken to close them down. The indication from Mr. Trichet that he will not appear and that instead Patrick Honohan will address the inquiry on behalf of the ECB is unacceptable.

See this speech in context