No need for another re­port, Min­is­ter, just pre­vent the next bank­ing scan­dal

Irish Independent - - News - – CO­LETTE BROWNE,

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.

Fi­nance Min­is­ter Paschal Dono­hoe at a press con­fer­ence af­ter his meet­ings with CEOs from AIB, BoI, PTSB, KBC and Ul­ster Bank. Photo: Mark Con­dren

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