1 June 2015 Edition
Banking inquiry to hear politicians
To grow quickly and leapfrog each other, Irish banks got involved in widely speculative land and commercial property ventures
THE Oireachtas banking inquiry is now fully into its main investigation. It has been hearing evidence from senior bankers and over the next couple of months we’ll finally get to hear from the politicians themselves, including Brian Cowen and Charlie McCreevy.
To date, the focus of the inquiry has been on the night of the bank guarantee and this is because it is still unclear as to what actually happened that night. Witness by witness, though, we are getting closer to finding out and coming to a conclusion regarding what was by far the biggest, and most disastrous, decision taken by any Irish Government since partition.
The guarantee is not the full story, however.
From 1990 to 2007 we saw the development of national government policy – under Fianna Fáil, Fine Gael and Labour, regardless of the coalition make-up – which prioritised commercial and residential property speculation over genuine and cohesive social development.
• Former Finance Minister Charlie McCreevy will be quizzed
This was coupled with a loosening of financial regulation and the promotion of the 26 Counties as a de facto tax haven.
From 2002 to 2007, Irish banks started to compete with each other for the same small pool of developers. In order to grow quickly and leapfrog each other, Irish banks got involved in widely speculative land and commercial property ventures, using international wholesale funding to do so.
The shaky foundations of whole-funded growth was exposed by the 2007-2008 credit crunch. Irish banks couldn’t get access to international loans to pay off their earlier loans and this came to a head in September 2008
Since then, the real struggle in the crisis has been not so much over its resolution (all crises come to an end sometime) but who pays for the resolution. And in the South of Ireland, those who paid were the ordinary citizens while those who partied walked away from their obligations. And each day of the bank inquiry, this becomes ever more clear – that the ones who partied were not people taking out mortgages but the 29 developers with debts of €32billion between them who dumped those debts onto our shoulders and used the Government to do so.
• In the next few weeks, former Taoiseach Brian Cowen will give evidence