Finally at last Cowen admits FF responsibility for crisis

RTE reported on a hands-up speech by An Taoiseach Mr Brian Cowen on the fact that domestic policy played a huge role in the collapse of the banking system. This is progress for him because it may free him to offer some leadership now because the country needs it. I hope the taste of humble pie was not too sour for him! I disagree with him regarding the inclusion of Anglo Irish Bank in the 2008 bank guarantee. With the right noises eminating from government, contagion to Bank of Ireland and AIB was unlikely. Nice try Brian but wrong decision! The other point in this is just how wrong the “experts” can be on the economy. Obviously, nobody added up the size of the property loan book and did stress tests that looked at a price collapse that had been signalled by the OECD or the Economist Intelligence Unit. This should have been done by somebody in the Department of Finance. I wonder did the Secretary General and senior staff receive good performance bonuses that year??? Is the Pope a Catholic?

Taoiseach Brian Cowen has acknowledged that the crisis in Irish banking was made worse by domestic factors.

In a wide-ranging speech to the North Dublin Chamber of Commerce at DCU, Mr Cowen also defended the inclusion of Anglo Irish Bank in the bank guarantee scheme.

The Taoiseach said the over-valuation of property, and the vulnerability this caused within the banks, put Ireland in a weaker position when the global financial crisis came.

The Taoiseach said a number of mistakes were made which contributed to the banking crisis, adding the Government shared responsibility for its role in these. He said property tax incentives in place from the mid-1990s should have been scrapped many years before he abolished some of them in 2005.

He said governments should never again intervene in property markets, though tax breaks or other measures, in a way which would make a property bubble possible.

Mr Cowen said government, regulators and auditors also shared responsibility for failing to implement tighter regulation of key financial institutions.

‘The Irish banking sector’s image at home and abroad has been badly damaged by the litany of scandals of non compliance within individual banks and the unacceptable scale of payments to individual bankers, some of whom presided over reckless lending,’ he said. ‘Regardless of the international crisis, these practices are simply not acceptable,’ he added.

The Taoiseach said advice from bodies such as the Central Bank and IMF in
2007 suggested that Irish banks had enough capital to absorb likely loan losses. He said that while this proved to be ‘fundamentally wrong’, no-one in the independent authorities ever advised the Government that banks’
capital was not sufficient.

He also defended his record on the Irish economy, saying the Government had taken actions before the financial crisis in 2008 to reduce risks linked to the property boom. He referred to his resistance to calls to abolish stamp duty, and the abolition of a number of property tax reliefs.

Mr Cowen said he was ‘more convinced than ever’ that the Government decision to guarantee the banks in September 2008 was correct. He added that the exclusion of Anglo Irish Bank from the scheme would have resulted in ‘contagion’ for other banks.