Standard and Poors.
What a miserable-sounding bunch. If I had to write a Western, those are the names I’d use. Moody and Fitch, the two back-shootin’, dry-gulchin’ no-account, rattlesnake gunslingers. Standard and Poors, the bank that sent Moody and Fitch out to shoot up the widda’s homestead.
Jest a mite past noon, I fell a-talkin’ — sorry. I got carried away there for a second. At lunchtime, I shared a coffee with my good friend Wrinkly Joe, and the conversation came around to the ratings agencies that pronounce on the creditworthiness of entire countries.
Who are they? I asked.
Fuckers who get paid to say things, he replied.
What. You mean they say anything they get paid to?
So if it suited some big finance guy to downgrade Ireland’s credit rating, all he’d have to do is slip Mr Fitch and Mr Moody a sizeable wedge and they’d call us a crowd of gobshites?
Now, these three agencies, until very recently, were rating Irish banks and Irish sovereign debt as AAA, which means prime debt. They thought Ireland was a cast-iron bet. Therefore, as Wrinkly Joe pointed out, they showed the same degree of curiosity about the Irish banks as the auditors did.
Back in 2006 and 2007, when a travelling roadshow of money was making its way around Dublin, going from bank to bank to make their balance sheets look healthy when their audit date came due, certain well-known accountancy firms had responsibility for making sure that the Irish banks were operating a clean business.
Now, as it happens, WJ is related to an accountant who is utterly baffled by what happened. He can’t understand how the auditors could have walked into the banks and failed to notice that they took in a deposit of a billion euros yesterday from another bank. He can’t understand why they didn’t come back to see the billion euros leave the bank by the back door as they left by the front. He can’t figure out how they missed the €80 million loans to Anglo’s chairman or the fact that another bank took them over for a few hours while the auditors were in the building.
These are big names we’re talking about. KPMG , Pricewaterhouse Coopers and Ernst & Young. I’m not an accountant, much less an auditor, but the very same questions occurred to me. What were these people being paid to do? What did they think their role was?
There are methods of finding out if a company has been trading fairly, but for some reason, these top firms didn’t seem to use them. Why? Most auditors will look at your books, and if they can’t understand what you’ve been doing, they won’t sign off on your accounts. But not these boys. Not the auditors who looked over the books of Anglo, Irish Nationwide, Bank of Ireland or AIB.
No indeed. These boys didn’t see any reason to dig into the accounts for the previous year.
What sort of conversations took place in the offices of the people who ran our banks?
Auditor : Could I just ask you about this large transfer of funds ..?
Bank chairman : Look over there!
Or did the conversation go
Hi, Seán. We’re here to have a quick glance over the old bookaroonies, if that’s not too much trouble.
No probs, fellas. I’ve got a table in Shanahans for one o’clock, so don’t be all day about it. We had to invite old Neary as well, but that’s life. He can regulate the cocktails. Yuk yuk yuk.
And meanwhile, who was regulating the big auditing firms who somehow failed to notice that there was a gigantic hole in the balance sheets of all the banks? When Lenihan said we all lost the run of ourselves, was he including those at the top of the financial heap, or just us little people?