Current Affairs Economics Politics

The Banking Inquiry Whitewash, Covering Up For The Party Tigers

With the death of Ireland’s so-called “Celtic Tiger” economy in 2008-2010 the country entered a period of severe recession, made worse by the erratic, panic-driven policies of the then Fianna Fáil – Green Party coalition government and its successor in the present Fine Gael – Labour Party administration. By 2012 the nation was firmly under the financial diktat of the Troika, a body consisting of the European Commission, European Central Bank and the International Monetary Fund. With the external oversight of the Troika came an abrogation of Ireland’s sovereignty and a period of indentured taxation imposed on the Irish people, leaving them financially responsible by 2013 for some for 42% of the total cost of the European banking crisis, at a rate of €9,000 per person. This was an artificially exorbitant penalty for a EU-wide crisis that the vast majority of ordinary men and women on this island had no part in creating. However the political elites of the time accepted the dire economic restraints placed upon the country by blaming the supposedly profligate actions of Seán and Síle Citizen. In the words of the then Fianna Fáil minister of justice, Dermot Aheren TD, speaking in 2010:

“Let’s be frank about it, the country had a party. We hadn’t money for 800 years and for 15-20 years the country had a bit of a party and now we have to pay for it.

There’s a whole load of people who’ll say, ‘well I didn’t benefit’. We all benefited.”

These asinine sentiments were echoed by his equally despicable FF colleague, Brian Lenihan TD, the minister for finance at the height of the crisis:

“Let’s be fair about this – we all partied.”

That was the official line of the “continuity state” and it seems that little has changed over the last half-decade. Certainly there is no real sense of shame or contrition to be found in the “Report of the Joint Committee of Inquiry into the Banking Crisis” launched yesterday after fourteen months of deliberations – and controversies. It is a case of collective responsibility, whitewashing the sins of certain individuals, organisations and pampered elites. For if we are all to blame then nobody is to blame. The main findings in the 460 page document state that:

  • The financial policies of successive Irish governments from the early 2000s onwards encouraged a burgeoning and predictably self-destructive property bubble as one of the driving factors of the economy.
  • The Central Bank and Financial Regulator was aware from 2003 that potentially ruinous lending practices had been adopted in the Irish financial sector, primarily by the corporate and high-street banks, including an over-reliance on property-based loans.
  • The governments of the period regularly ignored or dismissed the counsel of the Central Bank and the Department of Finance, engaging in unsustainable or dangerous economic and budgetary policies.
  • The “soft landing” of the Irish economy was never substantively tested or even fully advocated in advance of the recession, a failure of care by the Financial Regulator.
  • That the Anglo-Irish Bank was solvent on the 29th of September 2008 and would have been able to continue its normal business on the night that the infamous guarantee was put in place.
  • That the European Central Bank (ECB), one of the future partners in the Troika, pressured the government of Ireland into accepting the so-called “bailout” in 2010 (that is the “request” from Ireland for external assistance, with pledges to undertake radical economic “reforms” and restructuring of the banking system).
  • That the suggestion of “burning” senior bondholders was dismissed out of hand by the ECB in 2010 with the specific and heretofore unprecedented threat of removing Emergency Liquidity Assistance (ELA), which was supporting the Irish banking sector, should the government not agree to ECB demands.

The report also highlighted the lack of cooperation from the ECB and the dismissive attitude towards the inquiry by Jean-Claude Trichet, the ECB boss from 2003-2011, and other officials who played a crucial part in bringing Ireland under the remit of the European Union institution.

Two left-wing members of the inquiry, Pearse Doherty TD of Sinn Féin and Joe Higgins TD of the Socialist Party, refused to sign the document, branding it as “fundamentally flawed” and failing to bring to task the “cabal of speculators and bondholders assisted by leading politicians of the day” who caused the socio-economic collapse of the last nine years. One of course could also mention the establishment press in Ireland, cheerleaders for the property boom, who willingly played their role in the inflation of the property bubble despite knowledge of the risks involved. Tellingly the sense of relief felt by the members of the committee from the parties of the right who bore the greatest responsibility for the rise and fall of the Celtic Tiger, Fine Gael, Labour and Fianna Fáil, was visible. The appetite for truth and justice was found wanting in most of their ranks and continues to be so.

Meanwhile, despite the reprehensible nature of the “austerity” policies pursued by the last two, centre-right coalition governments to safeguard the interests of those who benefited in the first instance from the Celtic Tiger years, there are still those who would defend the indefensible, former progressive poachers turned conservative gamekeepers. Utterly shameful…

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