While Greece is grabbing all the headlines, the Irish Banking Inquiry into the Irish financial crisis deserves its fair share of attention. Like Iceland, Ireland has decided to spend the necessary time to actually look at why it suffered a banking crisis and ended up with a multi-billion euro bailout. To date, its findings have confirmed many of the points I made in Transparency Games.
The Inquiry found the Irish regulators were captured by the banks.
As David Doyle, a former senior officer in Ireland’s Department of Finance, observed:
the Central Bank placed undue reliance on the (Financial) regulator’s assessment of the financial reports of the Irish banks. That was a mistake.
The Regulator took the reports of the banks at face value and did not subject their loan books to any meaningful scrutiny. That was a mistake.
The Department of Finance was wrong to rely on consensus forecasts for a soft landing. It was also wrong to take at face value the assessment of both the Central Bank and the Regulator of the state of the financial sector. I regret this.