Banking Crisis Reports

The report by the Central Bank Governor, Patrick Honohan, clearly indicates that the Irish banking crisis was caused by excessive land and property lending by the Irish banks themselves and he confirms that the failure of Wall Street’s Lehman Brothers was “not decisive”.

So in brief, although International pressure somewhat contributed to the intensity of our Irish banking crisis, the characteristic of this problem were mostly domestic. Mr Honohan also states that house prices had been dropping for some 18 months prior to the collapse of the now infamous Lehman Brothers, back in September 2008.

Patrick Honohan Central Bank Governor.

Speaking to Thurles.Info this morning, following the publication of the first reports into the causes of our banking crisis, North Tipperary Deputy Noel Coonan stated that independent experts have now confirmed that Brian Cowen and his Government were 100% guilty of gross failures in this country’s economic management and North Tipperary taxpayers are amongst those who have been left to pay the price.

Deputy Coonan stated:
“No matter how much spin Brian Cowen puts on the reports carried out by the Central Bank governor and International Banking experts, it has been affirmatively laid out in black and white that the banking crisis was not caused by Lehman Brothers, but by bad policy making decisions on our own back yard.”

In his report Patrick Holohan, said: “The weaknesses of Irish banks were not caused by the interruption of the flow of cheap money from abroad,” and he also commented: “Fiscal policy and budgetary measures aimed at boosting the construction sector, were significant factors in contributing to the unsustainable structure of spending.”

Deputy Coonan continued:
“The Government can no longer cover up its blunders with political spin and wrangling and must take full responsibility and apologise for their decisions which have caused this crisis. Fine Gael wants Brian Cowen and others to give their testimony to the inquiry in public, and not in private as planned. The report by international banking experts Klaus Regling and Max Watson heavily criticised the Government for their handling of banking regulation and ineffective government economic policies. They say that his was a “home-made crisis” and Government policies “added fuel to the fire,” Brian Cowen’s fiscal policy “heightened vulnerability of the economy” and that “counter cyclical budgets could have moderated the boom”. These quotes are all taken from page one of the Summary to be published. Fine Gael Finance Spokesperson Richard Bruton TD said, as far back as Budget 2007, that: “You cannot build indefinite spending growth on the back of a building boom no more than you can build long-term economic prosperity on the back of a building boom.”

Fine Gael believe the next move now must be for politicians, whose stewardship is under scrutiny, to testify and answer questions in an open arena, where ordinary people can see them held to account. Deputy Coonan said North Tipperary tax payers “must see a thorough investigation, not only of the build up to this crisis, but of the response which has put the Irish people on the hook for €17,000 per family to keep failed institutions like Anglo Irish Bank, which are of no importance to our economy, operating as going concerns.”