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Banking commission of investigation


cyberianpan

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Facts about the inquiry:

RTÉ News: Govt proposes banking commission
The Commission, which is to be established by the end of June, will have six months to investigate the causes of the systemic failures of Irish banking.

Its work will be preceded by two reports - one by the Governor of the Central Bank, Patrick Honohan, on the performance of the financial regulatory system, and another by a recognised expert, or experts, who will conduct a preliminary investigation into the causes of the banking crisis and the lessons to be learned from it.

These reports are to be delivered by the end of May, and will inform the terms of reference of the Commission of Investigation.

The form looks about right to me, update from Dáil is here and here

Update: full Lenihan Statement is here- it explicitly confirms the government itself is in scope of the inquiries:
These reports will also consider the international, social and macro-economic policy environment which provided the context for the recent crisis. I expect both reports to be completed by the end of May this year and laid before the Houses shortly thereafter....
* the response of the relevant Government Departments and agencies, including the linkage between the banking crisis and overall economic management.
Update:

To clarify the streams are:
Report by 31 May: Preliminary inquiries 1a) "Regulation" under Patrick Honohan 1b)"Wider matters" under an international expert(s)
Then the Dáil will define exact scope for:
Report by 31 Dec: 2) Commission itself chaired by an international expert

The relevant act for the main inquiry will be the COMMISSIONS OF INVESTIGATION ACT 2004

It confirms investigation should be private

But with substantial powers to compel witnesses and seize documents (even from private residences)

My opinion on scope required:

In my view the commission will need to address both the property bubble and the loans bubble. These stakeholders need to be examined:

  • Irish bankers
  • CB & FR staff
  • Dep Fin & Taois civil servants
  • ECB & EC staff
  • Journalists
  • Banking independent directors
  • Auditors
  • Ratings agencies
  • Stockbrokers
  • Those in the interbank debt market
  • Trade unionists
  • Developers
  • Auctioneers
  • Politicians
Bubbles have always been a feature of open markets, so the inquiry has to be mindful of that , my view is that serious expertise will be needed to delve into them:

  • economists (macro, property, investment & behavioral)
  • sociologists
  • accountants
  • banking experts
  • and more...
Areas of investigation would need to cover:

  • Journalistic coverage at the time
  • The Irish cultural obsession with owning property
  • Internal minutes from bank boards and management committees (especially to see how dissent was treated)
  • Structural deficiencies of the property market (shoddy conveyancing process, lack of pricing data etc)
  • All above mentioned stakeholders etc
Given the cost of these bubbles and their effects: I think we can afford to spend a few million and get the best international experts in.

cYp
 
Last edited:

spidermom

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Here's hoping that the supposed "independant" auditing of banking institutions is not forgotten!


This may be where the largest scandal lies!!!
 

MPB

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RTÉ News: Govt proposes banking commission



The form looks about right to me, full details in the Dáil later

cYp
Any info on what these experts will be expert in? Will they investigate the Auditors and legal advisors to the Banks and Govt. Depts.

And what about the political decisions taken that may have led to the system being manipulated and abused and the reasoning behind these decisions being made in the first place?
 

cyberianpan

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Any info on what these experts will be expert in? Will they investigate the Auditors and legal advisors to the Banks and Govt. Depts.

And what about the political decisions taken that may have led to the system being manipulated and abused and the reasoning behind these decisions being made in the first place?
They are leaving this open, as you can see from my (updated) OP there's a pretty wide scope to consider

My main concern now would be to ensure that Governor Honohan is given a good few million for the preliminary reports and that we get TOP experts in.

cYp
 

MPB

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They are leaving this open, as you can see from my (updated) OP there's a pretty wide scope to consider

My main concern now would be to ensure that Governor Honohan is given a good few million for the preliminary reports and that we get TOP experts in.

cYp
I like your style and agree Honohan is a good place to start. Even if they are trying to fudge and drag it out I do not think they will get too much past him.
 
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This must be investigated overwhelmingly in public from the very start. If it's not in public then it's secret. They've been keeping it secret since early 2007 - THREE YEARS AGO. NO MORE! The opposition should not assist with the cover up a moment longer.

- cancel pairing arrangements
- motion of no confidence
- parliamentary warfare

IN PUBLIC FROM THE START - NOTHING LESS.
 

Digout

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I like your style and agree Honohan is a good place to start. Even if they are trying to fudge and drag it out I do not think they will get too much past him.
Honohan's report is into the regulator. We need to see the scope of what he can report on. My bets say that his report will be scoped in a way that all his summary can say is "The regulation system failed".
 
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Harney just doesn't get it. She is killing off any remaining positive legacy of the PDs.
'I personally favour what will work and what is effective. That's far more important if it is public or private.'
It has to work AND be in public. Harney sounds just like Haughey would have sounded.
 

cyberianpan

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Here's the detail that will go before the Dáil

-to request the Governor of the Central Bank to report to him on the
performance of the respective functions of the Central Bank and Financial
Regulator in the period since the establishment of the Financial Regulator up
to September 2008 having regard to the statutory powers, roles and
responsibilities of the Central Bank and Financial Regulator;

— to commission an independent review from a recognised expert or experts of
high standing and reputation to conduct a preliminary investigation into the
background to and causes of the recent crisis in Ireland’s banking system up
to September 2008 to assess what lessons can be learned and to inform the
future management and regulation of the sector, both in relation to individual
institutions and in relation to the management of risks and stability issues
within the regulatory and governmental systems;

— that these reports will consider also the international, social and macroeconomic
environment which provided the context for the recent crisis in the
banking sector;

- that both reports are to be initiated as soon as possible and completed
urgently and no later than 31 May 2010;

— that following completion of these reports, an independent, statutory
Commission of Investigation is to be established by 30 June 2010, chaired by
a recognised expert of high standing and reputation, to identify, examine and
report on the causes of the systemic failures such as corporate strategy,
governance and risk management in the Irish banking sector which
culminated in the need for the State guarantee, the recapitalisation
programme, the nationalisation and rescue recapitalisation of Anglo-Irish
Bank and the establishment of NAMA in order to preserve financial stability;

— that the terms of reference for the Commission of Investigation will be
informed by the conclusions of the reports of the Governor of the Central
Bank and the independent review;

- that the report of the Commission of Investigation would be completed
within six months;


The two preliminary reports look like they have excellent scope, the lead expert on the more general one will need to be someone of
1) Serious global stature
2) High ability

Also the above says "up to September 2008" - does that include September ?

cYp
 

Propforward

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6 months to establish the commission and 6 months to investigate and 6 months to report.
a year and a half before we get answers!!!
Surely we should have a report before the bank guarentee scheme is up for renewal.

Sounds like a FFudge again.

but anyway What is the point in an inquiry - the dogs in the street know how it happened and who let it happen and who made it happen -
there should be a special national fraud court set up and the DPP should be charged with assembling a task force containing experts in forensic accounting and banking to see what charges can be brought to bear under current legislation
new legislation should be enacted to allow acts of large scale banking fraud to be treated as treason

until then fingleton, quinn, mcnamara, carroll, lenihan, cowen et al should have their assets frozen pending the outcome of investigation
 

Cassandra Syndrome

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Neo Feudalists investigating neo feudalists? Its a fudge. More pointless non productive work for their cronies while the real economy descends further into Dante's Inferno.

btw, a Bubble and a true free open market is an oxymoron.
 

cyberianpan

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Frank Fahey? :cool:
My opening bid would be Warren Buffet - now I don't think we'd get him - but any appointee needs to be benchmarked to him

On the economists ... I'd go for Shiller, Roubini, Thaler and Philip Lane as the types we should look for.

cYp
 

cyberianpan

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MPB

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My opening bid would be Warren Buffet - now I don't think we'd get him - but any appointee needs to be benchmarked to him

On the economists ... I'd go for Shiller, Roubini, Thaler and Philip Lane as the types we should look for.

cYp
We will probably get Mc Laughlin, Mc Ardle and Hughes. And PJ Mara just for the craic.
 

Partizan

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My opening bid would be Warren Buffet - now I don't think we'd get him - but any appointee needs to be benchmarked to him

On the economists ... I'd go for Shiller, Roubini, Thaler and Philip Lane as the types we should look for.

cYp
I would also consider Gurdgiev, Roubini and Schiff. Maybe get in Mad Max as well..
 

Cassandra Syndrome

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Warren Buffet? Well he did trade in Irish Bank shares so there maybe a conflict of interest. How about Stiglitz? Or the renowned London School of Economics Economist Willem Buiter, who wrote that magnificient thesis on how the Good Bank Model would work as opposed to a toxic bank plan such as NAMA.

Or maybe Bethany McLean who exposed the Enron scandal?
 

cyberianpan

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Warren Buffet? Well he did trade in Irish Bank shares so there maybe a conflict of interest.
That's partly why I'd consider him as he knows his stuff. He was one of the first mainstream commentators to warn of the problems in the MBS/CDS markets

How about Stiglitz? Or the renowned London School of Economics Economist Willem Buiter, who wrote that magnificient thesis on how the Good Bank Model would work as opposed to a toxic bank plan such as NAMA.
Stiglitz is a bit too political... Willem Buiter now works for Citi, also I don't find him that clear minded, though he'd be good as a monetary policy/economist on the committee

cYp
 
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The government have known about the state of the banks since before the 2007 election, as reported by Vincent Browne in The Irish Times:

"The Department of Finance and Brian Cowen personally must have had prior notice, from at least the beginning of 2007, that the banks were in crisis, especially Anglo Irish. Michael Somers, then head of the National Treasury Management Agency (NTMA) said he knew Anglo was in trouble from then and it isn’t believable he didn’t tell anybody.

The officially designated authority on banking, Patrick Honohan, now governor of the Central Bank, has written in the Economic and Social Review: “A very simple warning sign used by most regulators to identify a bank exposed to increased risk is rapid balance sheet growth. An annual real growth rate of 20 per cent is often taken as the trigger. Each of the locally controlled banks had at least one year in which this threshold was triggered. One of them, Anglo Irish Bank, crossed it in eight of nine years, and indeed its average annual rate of growth 1998-2007 was 36 per cent.”

So how was it that nobody shouted stop or, more likely, how was it that when many shouted stop Brian Cowen, Mary Coughlan, Mary Hanafin, Mary Harney, Micheál Martin, Dermot Ahern, Willie O’Dea, Éamon Ó Cuív, Noel Dempsey and Martin Cullen did nothing?"

The bank guarantee was (we are told) given by Brian Lenihan and Brian Cowen:

"... the guarantee given that night on September 29th, 2008, was itself reckless.

Again to quote the oracle on this, Patrick Honohan: “No public indication has been given that the authorities gave serious consideration to less systemically scene-shifting – and less costly – solutions. For example, they might have provided specific state guarantees for new borrowings or injections of preference or ordinary shares – approaches that were widely adopted across Europe and the US in the following weeks.”

Blanket guarantees for banks one of two big mistakes - The Irish Times - Wed, Dec 30, 2009

Now Lenihan and Cowen have together developed NAMA which transfers billions of loans by the end of Feb from the likes of AIB - who were behaving like this in March 2009:

"A SENIOR judge expressed astonishment that AIB handed out €550m loans to five companies formerly controlled by Liam Carroll with only a letter and the deposit of title deeds as security.

But High Court judge Mr Justice Peter Kelly said that it was "astonishing" and "extraordinary" given the vast sums involved that AIB's only security for the borrowings was letters of undertakings from a solicitors firm and the deposit of title deeds.

The bank's security was described by the judge as "fairly fragile" and "a far cry from a legal mortgage".

The judge told lawyers acting for AIB that it appeared from court documents that it had never inspected the title to the properties or conducted an investigation into the title.

He also highlighted a series of errors whereby one of Mr Carroll's companies, Danninger, was identified as the owner of various properties when in fact it was owned by other companies within the Zoe group."

Judge shocked at AIB security when lending to Carroll firms - Courts, National News - Independent.ie

The government just don't get it, even now. At the first opportunity the country must put them all in handcuffs.
 
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