No need for another report, Minister, just prevent the next banking scandal
THE overriding cultural problem in Irish institutions is not in banks, or gardaí or the HSE, but in politics – it’s an indolent culture in which politicians prefer to emote and pontificate following national scandals rather than act to prevent the next one.
Government TDs expressing shock and confusion that banks’ paramount concern is their bottom line, and not the interests of individual customers, should reacquaint themselves with the parable of the scorpion and the frog.
Having assured the frog he won’t sting him if he gives him a lift across the river, the scorpion nevertheless stings the frog in midstream.
As the frog begins to sink below the water, he asks the scorpion ‘why?’ “It’s in my nature,” is the reply.
Instead of taking assurances from the banks at face value, like the gullible frog, it is incumbent on the Government to protect itself, and citizens, from attack.
Banks are commercial entities in business to make money. If that comes at the expense of some luckless customers, then so be it.
Labelling the banks’ behaviour as “unacceptable” or “appalling” or professing himself to be “so annoyed”, as Finance Minister Paschal Donohoe did at the weekend, does nothing to protect customers.
Ensuring the regulatory system in which banks operate is as robust as possible, while making it as easy as possible for customers to enforce their rights, are the only things that will make any difference.
Instead of doing that, Mr Donohoe has commissioned a report on banking culture, which he expects to have on his desk by March – at which point another report will probably be ordered to “scope” out some kind of further never-ending review process.
Is everyone in Government Buildings suffering from amnesia? Has Mr Donohoe forgotten that we already have a considerable number of reports, of relatively recent vintage, into the banks?
The Regling and Watson report, published in 2010, found that the roots of the banking crisis were
One can only imagine the reaction as the Europeans realised the Paddys are at it again
“home made”. The Honohan report, also published in 2010, said “the essential characteristic of the problem was domestic and classic”.
The Nyberg report, which detailed the results of a Commission of Investigation into the banks, published in 2011, said the “problems causing the crisis, as well as the scale of it, were the results of domestic Irish decisions and actions”.
A banking inquiry report, published just last year, found the crisis was “directly caused by decisions of bank boards, managers and advisers to pursue risky business practices, either to protect their market share or to grow their business and profits”.
Lesser mortals, not in Government, would view these reports, and the tracker mortgage scandal, and conclude that not much has changed in the banking sector. But, an apparent side-effect of a career in politics is the development of an insatiable appetite for commissioning reports, to spell out the blindingly obvious, which are then roundly ignored.
While our politicians refuse to make decisions, they are not averse to demanding action from other people. In what may be the most hypocritical announcement from an Irish politician ever – an achievement that ought to be recognised – Fine Gael MEP Brian Hayes has reported the banks to the EU Competition Commission for alleged cartel-like behaviour.
Yes, that’s the same EU Competition Commission that the Government has gone to war with it after it tried to force Apple to pay us €13bn. Apparently, Mr Hayes would welcome the Commission’s “swingeing” powers if it’s going after the banks, but not if it’s intent on forcing tech companies to pay us more tax.
Meanwhile, Fianna Fáil TD John McGuinness has written to ECB president Mario Draghi to intervene because he claims the Government is too conflicted, due to the €11.5bn in taxpayers’ money invested in banks, to adequately investigate the debacle.
One can only imagine the head-in-hands reaction to Mr McGuinness’s missive as the Europeans realised, with a sinking heart, that the Paddys are at it again already.
Having spent most of last year celebrating the 1916 Rising and our glorious Republic, are we now to understand that our political leaders are too dim-witted to be trusted with the oversight of the banking sector?
Instead of commissioning reports into banking culture, why doesn’t Mr Donohoe visit the Governor of the Central Bank and ask him what he needs?
What resources does he want, what additional enforcement powers would be useful and what kind of specialist staff need to be hired to help him do his job?
Then, Mr Donohoe should write some cheques and draft some laws.
Speaking on RTÉ at the weekend, the Finance Minister indicated that class action lawsuits are something that may be introduced as a consequence of the tracker mortgage scandal. Although, presumably, this will necessitate another report before anything happens.
Happily for him, the Law Reform Commission published a report, in 2005, recommending the introduction of multi-party actions. All it would take to implement is an amendment to the Rules of the Superior Courts – primary legislation isn’t even required.
The only reason this hasn’t been done already is because the State is loath to arm plaintiffs, taking cases against the State, with an additional weapon in their armoury.
It prefers that individual litigants – people with disabilities, the homeless, Travellers, disadvantaged children – should have to take on the might of the State individually, rather than pool their resources.
The Government can’t go back in time and prevent the tracker mortgage scandal from happening, but it can implement measures now to prevent the next one occurring.
Instead of crying to Europe about the behaviour of the banks, or commissioning pointless reports, the Government should do its job – find holes in the regulatory and legal system and plug them.