Two reports on the collapse of Irish banking have been released today.
I haven’t had a chance to read the reports thoroughly yet, but they agree on one thing. The bullshit that went on in Irish banks wasn’t caused by the collapse of Lehman Brothers. It was caused by the stupidity of our politicians and regulators, combined with the greed and dishonesty of our bankers. Anglo and Irish Nationwide, led by the two biggest muppets in the history of Irish banking, were on the road to going bust no matter what happened, while AIB and Bank of Ireland might just about have limped by if it hadn’t been for the global crisis, but all the banks were guilty of insane lending policies. And of utter, crass stupidity.
It was a home-grown problem.
I thought you might like to glance over them and maybe kick your dog or your cat, or, with any luck, a passing Fianna Fáil member or banker.
Now that I’ve had a chance to look over the reports I can tell you that they pretty much confirm what people have been saying.
The crisis was triggered by the collapse of Lehman Brothers but was created by a property bubble in Ireland and didn’t come from outside factors.
Cowen, Ahern and McCreevy made a shit of the economy, buying votes by cutting taxes and spending our money like sailors in a whorehouse.
The government relied far too much on tax from a property bubble that was always going to end.
The bank guarantee should not have covered subordinated debt.
The financial regulator was an arse-licking disgrace who was too cosy with the bankers to regulate them properly. If his staff were making things too uncomfortable for Seanie, Fingers or the rest of the boys, a quiet word on the golf course made the problem go away. Honohan calls this “regulatory capture”. In other words, the rustlers own the sheriff.
The two phony banks were doomed long before the international crisis due to their reckless lending practices and failure to follow proper procedures, while the other banks were barely hanging on by their fingernails They all abandoned proper vetting standards before handing out loans.
Honohan differs from other commentators by saying that Anglo needed to be included in the guarantee because it owed so much to the other banks that its collapse would have brought them all down. Seanie was into everyone for money, and Honohan argues that if Anglo went belly up it might have caused a run on all the banks. However, he’s talking about a catastrophic failure, not an orderly wind-up.
All in all, not much in either report that we didn’t know already, but Cowen comes out of it looking like a complete fool, while others emerge looking like the crooks they are.
Regling Watson report