Looks like we were easy pick­ings for the vul­tures of the bank­ing world

Bray People - - OPINION -

WHILE the early days of the bank­ing in­quiry have been roundly slated by the more jaded mem­bers of the na­tional me­dia as both un­der- whelm­ing and te­dious, the ini­tial wit­nesses have al­ready de­liv­ered some stag­ger­ing com­ments. The in­quiry, which has heard just two days of ev­i­dence so far, is un­likely to throw up any ma­jor sur­prises when it comes to ex­plain­ing the root causes of Ire­land’s spec­tac­u­lar bank­ing crash but some of the back­ground in­for­ma­tion that has al­ready come to light is very re­veal­ing, par­tic­u­larly in relation to the lack of ap­pro­pri­ate qual­i­fi­ca­tions among staff at the Depart­ment of Fi­nance.

Wit­ness Rob Wright, the for­mer Sec­re­tary Gen­eral of Fi­nance in Canada, who au­thored a re­port on the depart­ment in 2010, out­lined some shock­ing de­tails. Ac­cord­ing to Mr Wright, dur­ing Ire­land’s boom years and as the crash un­folded just 39 of the Depart­ment of Fi­nance’s 542 staff were trained to Masters De­gree level in eco­nomics. To put this in con­text - just seven per cent of the Depart­ment of Fi­nance’s Staff were ed­u­cated to Masters level in eco­nomics com­pared to 60 per cent of staff in the equiv­a­lent depart­ment in Canada.

In his re­port Mr Wright, an ac­knowl­edged ex­pert in his field, found that the level of ex­per­tise and qual­i­fi­ca­tions in the Depart­ment of Fi­nance was ”ex­traor­di­nar­ily low by in­ter­na­tional stan­dards.” Given this ev­i­dence it is per­haps eas­ier to un­der­stand just how some of Ire­land’s top bankers were able to run rings around the gov­ern­ment and se­nior of­fi­cials of the day in the lead up to the ill-fated bank guar­an­tee. It also goes some way to ex­plain­ing just how Ire­land’s prop­erty sec­tor and the as­so­ci­ated spend­ing frenzy was al­lowed to get so out of con­trol.

The lack of suit­able ex­per­tise was not re­stricted to the Depart­ment of Fi­nance; our legislators too were largely un­qual­i­fied when it came to eco­nomic mat­ters. Of the 166 TDs in the Dáil in the early days of the eco­nomic cri­sis only two, Joan Bur­ton and Richard Bru­ton, had any for­mal qual­i­fi­ca­tions in eco­nomics. That they were both on the op­po­si­tion benches at the time prob­a­bly did not help mat­ters.

Ob­vi­ously not ev­ery of­fi­cial in ev­ery depart­ment needs to have a qual­i­fi­ca­tion in that depart­ment’s area of re­spon­si­bil­ity, but in a sec­tion as cru­cially im­por­tant as fi­nance the need for ex­per­tise is markedly higher. That only seven per cent of staff in the depart­ment charged with ad­vis­ing the min­is­ter and the gov­ern­ment had suit­able qual­i­fi­ca­tions is deeply wor­ry­ing.

One won­ders if bankers who lied to the gov­ern­ment in the run up to the bank guar­an­tee were aware of this and, if so, was it part of the rea­son they were so con­fi­dent that their grossly in­ac­cu­rate fig­ures would be ac­cepted.

We can only hope that this is­sue will be rec­ti­fied but sadly six years after the crash lit­tle ap­pears to have been done. Ac­cord­ing to Rob Wright there are now almost 100 em­ploy­ees with an eco­nomics back­ground at the depart­ment. That is an im­prove­ment, but it still rep­re­sents just 18 per cent of the staff and far be­low the 60 per cent fig­ure in Mr Wright’s home coun­try.

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