Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

Question 86: To ask the Minister for Finance if the proposed banking inquiry will have constraints on its investigations or on the publication of findings; and if he will make a statement on the matter. [5683/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

The Government has decided to establish a framework for a comprehensive investigation into the causes of the systemic failures in the Irish banking sector which culminated in the need for the State intervention in the sector. The framework for investigation will have two stages. The first stage will consist of the preparation of two separate preliminary reports from the Governor of the Central Bank and from Mr. Klaus Regling, a recognised international expert.

The second stage of the investigation will be the establishment of a statutory commission of investigation, which will be chaired by a recognised expert of high standing and reputation. The terms of reference of the commission will be informed by the conclusions of the two preliminary reports. It is envisaged its remit will be to examine and report on the causes of the systemic failures in the Irish banking sector which culminated in the need for the State guarantee, the recapitalisation programme, the nationalisation and rescue capitalisation of Anglo Irish Bank and the establishment of the National Asset Management Agency in order to preserve financial stability.

The terms of reference will not be set until we have the benefit of the preliminary reports from the Governor of the Central Bank and Mr. Regling and the views of the Oireachtas on them. In examining these issues, the commission of investigation will have the powers available to it under the relevant legislation, which the Deputy is aware are substantial. The report of the commission of investigation, when completed, will be laid before the Oireachtas for further consideration and action by an appropriate Oireachtas committee.

I am satisfied the mechanism for inquiry contained in the Commissions of Investigation Act 2004 provides a robust framework which has already been tested with regard to investigation of matters of significant public concern. This framework will allow the causes of the systemic failures in the Irish banking sector to be identified and fully investigated by the proposed commission of investigation.

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

I thank the Minister for his reply. When he uses the word "culminated" in regard to the bank crisis, is he still talking about a September 2008 end with respect to the investigation? Do we not have to learn whether the response to this crisis was adequate, just as much as we need to learn whether the preventative strategy in place before the crisis broke was adequate? Why should people's accountability end when the crisis breaks? Was it not the case that both the regulator and the Governor of the Central Bank were assuring the public that the banks had no solvency problems throughout the period after September 2008?

Do we not need to investigate the adequacy of the information flow to those people who are so advising us? I put it to the Minister that it is equally important that we learn whether the responses we now make to the crisis are correct as to look back in history to whether a preventative strategy could have been better. Will the Minister allow the investigation to extend beyond that arbitrary date that the Government has used in the past?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

With respect to events or parties involved in the collapse of the banking and property sector, I have already made it clear and set out in Dáil Éireann that any wrongdoing which has come to light since September 2008 and any associated failure in the regulatory system to respond to that which was a continuation of previous practices should of course come within the scope of the inquiry of the commission of investigation. That is my view and I take it that the preliminary reports will be conducted on that basis.

With regard to interventions by the Government and by this House through the enactment of legislation, these matters were fully debated in this House at the time. The assessment of the adequacy of the response to the crisis is an entirely distinct exercise from an assessment of the evolution of the crisis in itself. It is quite clear that by September 2008 the crisis was of such gravity and scale that the nature of the various interventions which the Government has been obliged to make was unavoidable.

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

If I ever had the chance to be in the Minister's position, I would commit to open the inquiry. Although these measures have been fully debated, there have been honest different opinions as to which strategy was best, whether we made mistakes and whether the information provided to the Minister was adequate for him to make informed decisions. We need to investigate that if we are to learn how to prevent a recurrence in the long term. We must know that the response mechanisms were adequate.

Does the Minister agree, for example, with the Government's fateful decision to include subordinated bondholders in the guarantee? That deserves to be investigated because there is much honest difference of opinion in that respect. The Minister may have been right in his decision but do we not need to know if these decisions were correct, well-founded and based on evidence of the time? Is the evidence presented to the Minister to influence his decision not important to consider as part of the learning exercise?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

We will be in a clear position to deal with the issue of subordinated debt on 29 September, and a very exact computation can be made at that stage of what cost, if any, that element of the guarantee occasioned to the State. On the information at my disposal to date, it is an issue of marginal significance.