Joe Higgins (Dublin West, Socialist Party) | Oireachtas source

There is one issue and only one issue on which I am in agreement with the majority of members of the banking inquiry committee. This was that an extraordinary amount of work, research, personal stress and communal stress went into the workings of the committee, including the work by the personal staff of the members of the committee. I wish to acknowledge warmly and appreciate the work of my colleague, Diana O'Dwyer, in that regard as well as the teams of public sector workers who did a vast amount of background work. There is absolutely no issue with the amount of time and effort that went in. However, there are serious issues with the conclusions of the committee majority.

Witness after witness came before the banking inquiry, including bankers, developers and others. They spoke of the cutthroat competition that developed among themselves. This, in turn, drove the reckless lending practices that inflated the property banking bubble and led to the economic crash.

One of the grandees of bubble banking who gave testimony, a former chairman of Allied Irish Banks, had evidence to the effect that his vast institution was aping Anglo Irish Bank because it was driving faster than AIB in lending to developers and increasing profits. A former director of EBS, Eithne Tinney, herself a stern critic of many of the practices that went on, spoke about how there was a feeling within EBS that the Irish Nationwide Building Society was wiping their eye as it expanded its lending and began to post profits five times the size of the profits of EBS. Those were her words.

What was the result of all of this? Encapsulated in the figures given to the inquiry is the result. The six banks that were eventually covered by the guarantee increased lending exponentially from €120 billion in 2000 to almost €400 billion by 2007. They raked in €25 billion in profits from 2002 to 2008. They paid the six chief executives of those institutions an astounding €71 million in salaries. This was mirrored shortly afterwards in the disastrous €65 billion that the bankers and banks lost in the crash.

A fundamental question remains and it is the source of my fundamental disagreement with the majority on the committee. The question is not answered - it is not even asked. How could a small cohort of bankers, bondholders and developers be allowed to wield such enormous economic power in pursuit of private corporate profit and in the process inflict incalculable economic and social destruction on society? The second question is why the political establishment not only deferred to this cohort but in fact served their interests as they chased the maximisation of profit. The political establishment of the day positively pushed the deregulation of the financial industries to allow the banks and the developers to do what they did.

In their speeches to banking federations and others, the former Taoiseach, Bertie Ahern, and former Minister for Finance, Mr. McCreevy and Mr. Cowen, laid it out clearly. In March 2007 the then Taoiseach, Mr. Ahern, said to the financial services industry in New York: "Our commitment to supporting foreign direct investment is absolute" and "Ireland is very lightly regulated compared with most of our European colleagues". The then Minister for Finance, Mr. Cowen, lauded the type of derivative products that were being driven by the bankers in these terms: "Increasingly sophisticated derivative products seem to be arriving daily as a sector seeks to become ever more professional in the way it manages and hedges its risks and chases after that elusive higher yield." He was speaking to the Institute of Banking. These were derivative products that the billionaire Warren Buffett described as time bombs and weapons of mass destruction. The Minister, Mr. Cowen, went on to say:

Of course, that’s easy for me to say because you are players on the field and I’m just an ardent supporter on the sidelines. I will continue to wear your colours.

Mr. Cowen should be advised to watch the recently released movie "The Big Short". He would learn very quickly about the nature of the products for which he was praising the bankers.

My finding is this: extreme profiteering, driven by corporate greed, drove the property bubble and caused the crash. The bubble Governments of the then Taoiseach, Bertie Ahern, the then Tánaiste, Ms Harney, and the then Minister for Finance, Mr. McCreevy, served the interests of bankers and developers and not those of ordinary people. Deputy Enda Kenny, who at the time had been the Fine Gael leader for five years, was a silent non-opposition figure in the field.

It is true the regulators failed disastrously, but they were merely following the political leadership of the State to which they were responsible. Free reign was given to developers to speculate outrageously with the price of building land. They ensured the price of a home for ordinary people increased fourfold in the space of ten years, shackling them to the horror of unsustainable mortgages and negative equity, a situation that many of these people are still in. They were represented politically by the major parties of the day.

Seriously, the one finding of the majority of the committee in the area of property and all of this was that there should be a property register. That is embarrassing. What about controlling the price of building land and directing that its use should be subject to the needs of society rather than private profit?

Many people have asked me again and again why no one went to jail as a result the massive destruction caused to society by the cabal of bankers, bondholders and developers.

It is very simple. The vast majority of what they did was legal because it was legislated for in this Chamber by a majority of the political parties. They legislated to allow them to profiteer in the way that they did, which put the whole of our society at risk. That is why they are not in jail. The media is not asking any questions about its role and was let off the hook by the committee. Significant sections of the media glamourised developers, bankers and their profiteering. They called them the men with the Midas touch and said they turned everything they had into gold.

The 2007 property awards, sponsored by the Irish Independent, embarrassingly gave the property deal of the year award to the Irish Glass Bottle Company, which cost the people hundreds of millions of euro. Some five out of the seven award-winning developers at a glittering gala dinner sponsored by the Irish Independentwere among the top ten debtors in NAMA. The media did not just glamorise the sector; it was a player in the market and earned tens of millions of euro from developers, advertisements, etc.

If any lessons comes out of this disaster, surely it is that the provision of homes, the most basic human need of our people, and banking should not be the playthings and subject of profiteering by a small cabal of developers and bankers, but should be public services. Therefore, let us put billions of euro into the creation of new, decent and modest homes for our people that workers on middle and lower incomes can afford to buy. Social housing should be built for those who desperately need it.

The Minister, Deputy Noonan, should come to the House and explain why in March 2011 he did not come to the House, where we sat and waited for him, to announce that he would burn bondholders, something he intended to do. He was interrupted on his way over here by a phone call from Jean-Claude Trichet, the president of the European Central Bank, who threatened him with a bomb in Dublin if the bondholders were burned. The Minister came to the House, changed his speech and said nothing to the assembled ranks of the democratically elected people. He was speaking on behalf of a supposedly sovereign Government which had been blackmailed in that way. He should apologise for the fact he did not explain to us and the Irish people there and then that he was threatened in this way by a virtual economic and financial dictatorship. They are some of my views on what we have done over the past year and a half.

See this speech in context