Stephen Collins on Social Solidarity and Antisocial Behaviour by Bankers

Greedy actions of rich elite undermining national will

INSIDE POLITICS: Many who contributed to this mess are still feathering their own nests without a thought for the public purse, writes STEPHEN COLLINS

THE SELFISHNESS and stupidity of some of the most privileged people in Irish society has made the task of rescuing the country from its current economic plight even more difficult.

The fact that the board of Bank of Ireland, including its so-called public interest directors, authorised the pension top-up worth €1.49 million for its chief executive demonstrated a breathtaking disconnection from the concerns of ordinary taxpayers whose hard-earned cash has been used to bail out the bank.

It is incredible that the people who got us into the banking mess that pushed the country to the edge of bankruptcy are still so blind to the damage they inflicted that they were blithely prepared to give away €1.49 million of the bank’s money to give its chief executive a pension of €367,570 a year at the age of 55.

That it happened at a time when trade union leaders like Jack O’Connor were doing their best to convince their lower paid members about the merits of a pay deal designed to deliver industrial peace only rubbed salt into the wound. To make matters worse, staff at Bank of Ireland have recently been asked to accept changes in their own pension scheme which will reduce their entitlements, while new employees have been excluded from the defined benefit pension scheme since 2007.

The initial reaction of Taoiseach Brian Cowen and Minister for Finance Brian Lenihan to the top-up did nothing to help. Instead of expressing righteous indignation, as they were perfectly entitled to do given the amount of public money involved in rescuing the bank, they focused on the legal entitlement of the bank to pay the pension top-up.

Minister for Social Protection Éamon Ó Cuív showed a far better grasp of the political and moral imperative of the case by last weekend calling on Richie Boucher to “voluntarily forgo” his pension top-up.

After days of pressure from Opposition and trade union leaders, the Taoiseach finally made a guarded comment suggesting the top-up was a bad idea and Boucher took the hint.

It is not just those in charge of Bank of Ireland who are out of touch.
Most of the people at the highest levels in the financial institutions who came close to crashing the banking system are still in place at board or senior executive level and drawing massive salaries. Former Fine Gael leader Michael Noonan hit the nail on the head during the Dáil debate on the Central Bank Bill this week when he said that while the Government had done its job in appointing a new Governor and a new regulator, the banks had not done their job.

“The Government has not done its job in respect of the banks because to get a fresh start, we need a clean sweep of everybody who was tainted by the culture. There are many people still in situ who were tainted by the culture and they will revert to type within a year or two years when things settle down . . . It is time for a clean cut.”

It is not just bankers who seem impervious to taking the responsibility that is supposed to go with their enormous salaries. Recent events at the Moriarty tribunal have badly damaged the credibility of a body that has been sitting for 13 years at enormous expense, with its senior lawyers being paid close to €1 million a year. Will anybody be called to account for the serious errors made by the tribunal?

The problem with the professional elite escaping responsibility for its mistakes, with its excessive salaries intact, is that it is capable of putting a huge dent in the spirit of social solidarity so badly needed if the country is to work its way out of present difficulties.

The disconnection that exists between the rich and the rest of society is mirrored to some extent by the disconnection between public sector workers who have secure jobs and generous pensions and private sector workers who don’t.

However, the Government’s effort to persuade public service workers of the need to accept reform are undermined by the spectacle of wealthy bankers, lawyers and other professionals, on far higher incomes, continuing to feather their own nests without a thought for the public purse.

There is also huge and justified public resentment at the politicians who got us into the mess. The biggest problem facing the Fianna Fáil-led Government is that because of its past action, or inaction, it lacks the moral authority to persuade people it is doing the right thing. It is important, though, not to lose sight of the fact that the country can be dragged out of its difficulties through a concerted effort by Government, supported by all segments of society.

The many prophets of doom often don’t understand basic economic facts but the danger is that they could undermine the national will to deal with the problem in a resolute but fair fashion. The most urgent task is to restore the public finances to a healthy state. While the money poured into Anglo Irish Bank has added to the difficulties, it has not undermined the capacity of the country to deal with them.

As long as the Government continues to focus on getting the public finances in order and takes whatever decisions in terms of cutting spending or raising taxes that are necessary to reduce the deficit there is no reason to give in to counsels of despair.

The Greek debacle shows what will happen if we don’t face up to reality.
The banking controversy of the past week could do serious damage if its saps the will of those involved at various levels in trying to get the public finances under control.