Mediocre and incompetent regulators got us into this mess, and they’re still here
IF we learned one lesson from the trial of the former Anglo Irish Bank directors, it was that Patrick Neary, the former financial regulator, was one of the most incompetent individuals ever appointed to a senior position in Irish life. Neary continues to enjoy retirement on a breathtaking pension (which included at its outset a €630,000 lump sum), despite the toxic mixture of indifference, mediocrity and lack of curiosity he brought to his job. The fruits of his labours have been obvious in recent years, with hundreds of thousands of Irish families ravaged by the emigration, job losses, wage reductions and cuts to social services that resulted from the bailout of the banks he was supposed to be regulating.
In fact, Willie McAteer and Patrick Whelan may well be the only two people in the country with anything good to say about him currently, for it was Neary’s incompetence that stopped them being sent to prison last week. Despite their guilt in illegally lending money to the Maple 10, it would be unjust, Judge Martin Nolan said, to put them behind bars when they were effectively assisted in their law-breaking by Neary and his colleagues.
In one minor way, Neary can be said to have done the country some service. By his inaction and his failure in court to demonstrate that he ever knew what he was doing, he has drawn attention to the startling levels of mediocrity that were tolerated – even encouraged – at the highest levels in the years before the crash.
If McAteer and Whelan can point to Neary and argue that their behaviour was encouraged, so too can Neary share the blame with Bertie Ahern and his cabinet, whose affection for light-touch regulation in all matters was legendary. In Neary, they appear to have found the kind of patsy they were looking for, somebody who mixed lazy and laissez faire in one explosive cocktail.
In his evidence in the trial, Neary, according to one journalist’s account, said ‘I don’t recall’ on 30 occasions, ‘I don’t know’ 23 times, ‘I can’t recall’ 12 times, ‘I can’t remember’, ‘I don’t remember’ or ‘I cannot remember’ 12 times, ‘I’ve absolutely no recollection’ on four occasions and ‘that’s a complete blank to me’ once. His incompetence wasn’t unique, however. He and his ilk were everywhere to be found in the boom years – in the banks, in the financial services sector, in the upper echelons of the civil service and in government – gradually reducing Ireland to the kind of penury that has scarred an entire generation. WHETHER anybody has learned anything from this – and whether the ways in which we do business will change – is very much in doubt. That much became clear at the release of the Central Bank’s annual report during the week when governor Patrick Honohan was asked about the future of Con Horan, Neary’s second in command in the regulator’s office.
Horan had specific responsibil- ity for supervising Anglo, among other banks, but, like almost everybody else in that office, appears to have been a fan of the light, or invisible, touch.
Giving evidence in the Whelan-McAteer trial, Horan shared his boss’s unfortunate difficulties in remembering things. Like him, he didn’t write things down. Trained in the ‘art of taking notes’, Horan nevertheless neglected to make contemporaneous minutes of various crucial meetings that preceded the deal to unwind Seán Quinn’s holding in Anglo.
Horan has been in London for the past few years working with the European Banking Authority, the new watchdog set up to supervise European financial institutions, where he is employed, according to the EBA, as a senior ‘national expert’ working on ‘oversight and supervision’. He returns to the Central Bank in January.
Asked what job he would be taking up, Honohan refused to comment. Neither would he say whether any senior official in the Financial Regulator’s office had been disciplined for their lack of performance pre-crash or whether pensions or lump sums paid to them could be claimed back, even in part.
In fact, Honohan affected a breezy, ‘nothing to see here’ approach to questions about the madness that was exposed in the Anglo trial. That sort of mistake couldn’t happen again, he suggested, although he failed to offer any hard information as to why he believed this was the case.
He’s asking us to take him on trust but if the trial exposed anything, it was that the entire financial services sector, from the banks to the regulators to the politicians who appointed them, had been traditionally unworthy of such confidence. IF HONOHAN wants us to believe that the horrors of the past will never return, he needs to specify in detail all that has allegedly changed since 2008. In the meantime, it fell last week to one lone TD, Labour’s Arthur Spring, to raise concerns about Horan’s return to the office that caused so much carnage when he and Neary were in charge.
Honohan, like a lot of people, seems to be depending on the Oireachtas banking inquiry to salve the country’s post-collapse wounds. The inquiry would go a long way to restoring confidence in the financial regulatory system, he said last week. It’s unlikely, however, that such an investigation will tell us anything fundamental that we didn’t find out during the trial of McAteer, Whelan and Seán Fitz Patrick.
For years, Ireland was run by mediocrities, for mediocrities and, eventually, its people paid the price. What we need now is an assurance that mediocrity will no longer be tolerated.
Sadly, that kind of guarantee seems a long way away.