Tuesday, 2 February 2016
Joint Committee of Inquiry into the Banking Crisis: Statements
We are policy makers, legislators and public representatives and we have a duty of care in respect of all three of those strands.
I want to comment on a few of the changes that have taken place in response to this report. I make these points while also saying that one can never be complacent or say that enough is done. In respect of the Department of Finance, significant work has been undertaken in recent years to address the issues highlighted by the crisis. A comprehensive overhaul of our regulatory framework for the financial sector has been pursued at both domestic and EU levels since the financial crisis. Through the introduction of various initiatives, the stability and resilience of the financial sector have been strengthened and restored to a position where it better serves the economies and the people of Europe. I will not have time to go through all of the various changes but people will certainly be very familiar with them.
There have been some comments on the Minister for Finance and the issue of the ECB. I want to put on record my views on this. The Minister for Finance, Deputy Noonan, set out to the banking inquiry that the ECB President, Jean-Claude Trichet, was quite clear and that Mr. Trichet used graphic terms about what he saw as the consequences of Ireland burden sharing with senior bank bondholders. During the banking inquiry, the Minister made it clear to Deputy Joe Higgins that he was never threatened. In fact, he said:
I was never threatened that they'd withdraw ELA or assistance to the Irish sovereign but, and you'd well know from your experience here, in saying that Ireland would be treated as a country in default and a bank would be treated as a bank in default, the implications of that to me were clear. ELA could be suspended. ELA was always temporary.
I am quoting the evidence the Minister, Deputy Noonan gave to the banking inquiry. We can tally that with the quote he gave on the record of the Dáil and will see that the evidence was very much consistent.
In respect of burden sharing, the Minister for Finance has set out on numerous occasions that the Government considered it in the wind-down of the banks, including the IBRC encompassing Anglo Irish Bank and Irish Nationwide Building Society, but was prevented from taking action due to the ECB's unwillingness to provide the necessary support to allow such action - in other words, the provision of emergency liquidity insurance. However, it must also be remembered that as a Government, we were aware of the risks of burden sharing with senior bondholders. Indeed, the Minister, Deputy Noonan, stated prior to the 2011 election that no action could be taken without ECB support. In fairness to the late Brian Lenihan and the former Government, they too came up against this issue. It is important to note the renegotiation that has been carried out since, which has improved the cash flow to this country by €50 billion.
Senator Barrett has made a valid point on a number of occasions about the number of economists in the Department of Finance. It is quite an important point. It should be noted that the Department has significantly increased the number of economists since the Wright report. The figures contained in that report were based on the Department of Finance as it stood in 2010, including functions and staff which have since transferred to the Department of Public Expenditure and Reform. At the time, Wright completed his report in 2010, the overall Department had 542 staff. Of this, there were 39 economists who had a qualification at master's level, as cited by Wright. The Department of Finance has since focused on increasing the number of economists to meet the recommendations of the Wright report. The information provided to the joint committee last February detailed that there were 70 staff with qualifications in economics, more than 40 of which were at master's level or above in the Department. As of today that figure has increased to 89 staff with qualifications in economics, more than of 40 of which are at master's level or above. That is equivalent to about 11% of the Department's 350 staff.
In conclusion, I compliment the four Senators who played such a key role in this inquiry along with their colleagues in the Dáil. It was a proud and good day for parliamentary democracy and for the Parliament. Clearly, they were constrained by the law. I share the view that this is an issue which the next Oireachtas should look at, whether by way of constitutional referendum or further legislation to strengthen the hand of any of us or our successors who may be called on in any future inquiry.