The following editorial in today’s Irish Examiner is worth reproducing in full.
The header asks: Why are we pathetically complacent?
I don’t’ think the Irish people are complacent. I think rather they have, over the decades, being rendered totally powerless by the sheer weight of corruption within the political/administrative system.
Irish citizens can see the corruption, they are extremely angry about it, particularly since September 2008, but because the governing system is so infected with the disease it is, short of a revolution, almost impossible to make any serious challenge to the power of state corruption.
Challenging corruption – Why are we pathetically complacent?
Friday, July 26, 2013
It is not an exaggeration to say that the country was convulsed in the run up to the passage of the Protection of Life During Pregnancy Bill through the Oireachtas.
Tens of thousands of people marched, every media platform was dominated by debate on the issue. Croziers were dusted off and swung like broadswords in a way that once commanded obedience. Taoiseach Enda Kenny showed an unexpected ruthlessness to get the legislation passed.
We had, in Irish terms at least, a spectacular and almost unheard of form of protest — politicians risking careers on a point of principle.
It was, whichever side of the debate you stood on, a matter of right or wrong. A position had to be taken, remaining neutral was not an option.
Yet, and though the ink is barely dry on the abortion legislation, another manifestation of this society’s justice system’s dysfunction and ongoing failures, our seeming indifference to allegations of corruption — or the innocence and good name of those accused of it — presents itself and there’s hardly a game-changing ripple across the public consciousness.
There is certainly no prospect of 40,000 people marching through the streets of our capital to protest at yet another Irish outcome to an Irish problem.
Is it that we don’t care? Is it that five years after our banking collapse and not a single conviction to show for society-breaking years of Wild West banking that we are a beaten, abject people who have come to accept that for some people accountability is as remote and unlikely a prospect as levitation?
The collapse of the planning and corruption trial earlier this week because a witness is too ill to give evidence has served nobody well, not even the businessman, the councillor and the two former councillors in the dock. Though the principle of innocent until proven otherwise must always apply, too many important questions remain unanswered.
This one case may put the issue into a sharp, if fleeting, focus but there are myriad examples of our failure to adequately deal with the whiff of corruption.
Speaking to the Dáil’s Public Accounts Committee, former financial regulator Matthew Elderfield put it in the gentlest terms when he chided that we do not have a system capable of holding individuals to account or tackling white-collar crime.
How could it be otherwise? A report from that committee suggests that fewer than 60 state employees are focussed on white-collar crime. This figure includes all relevant gardaí, Central Bank officials and the Office of the Director of Corporate Enforcement staff assigned to the problem. We probably have more dog wardens.
It is surely, despite the occasional protest from cornered politicians, naive to imagine this is accidental. If it is, like our tribunals, it is profoundly under-whelming and utterly unequal to the challenge. More likely it is another example of our enthusiasm for rules but our fatal distaste for implementing them.
There is great, chest-filling talk about political reform, about a new political party even and changing the culture of how a citizen interacts with the state. Sadly, all of that will stand for nothing more than a cynical diversion unless we have a policing, regulatory and justice system capable of, and most importantly, enthusiastic about, investigating allegations of corruption.
It is said that a society gets the politicians it deserves and that may well be true, but it is absolutely certain that a society must suffer the consequences of the behaviours it tolerates. The evidence is all around us.
IT’S not all bad news. Sometimes, it’s like the country is on a downward spiral into permanent stagnation. But, occasionally there’s some really good news. For instance, have you heard that Goldman Sachs, the controversial cabal of international bankers, is pulling out of the International Financial Services Centre? Reliable sources say Goldman Sachs doesn’t want to do business in this country anymore. Whoopee!
Why are they leaving? Well, that’s something we should be shouting from the rooftops.
And they’re not the only bankers buggering off, I’m pleased to report. Several others are “handing back their licences”, according to Michael Somers, deputy chairman of AIB. And, he says, some of them have told him privately that it’s because of heavier regulation of their activities.
Not surprisingly, for a banker, Somers is dismayed. “I’m dismayed,” he told RTE’s business programme.
And this was reported sympathetically throughout the media, as though it’s a bad thing that various senior bankers, including the Goldman gobshites, are leaving. Sometimes, I wonder about this country.
The fighting Irish. The raging anger when the bankers crashed capitalism in 2008. The demands that bankers be fired, shamed, jailed – or worse. The anger at the light-touch regulation that allowed all sorts of cowboys to prosper, running their own banks into the ground. The insistence that there must be banking reform – this, we were told, Must Never Happen Again.
Well, folks, the notion that the banks should be kept on a tight rein is going out of fashion. Effective regulation is now dismissed as short-sighted. Support for regulation is caricatured as mere anti-banker rhetoric.
During the Celtic Bubble, bankers had a free hand. They acted with disregard for anything except their own interests. That’s not because they’re bad people – though some of them had the morals of jackals and the brains of peat briquettes. It’s because people who are paid massively, lauded as geniuses and given the run of the country will act accordingly.
Now, the pleas are mounting for lighter regulation and bigger salaries for bankers. And there’s no sign that this Government strongly disagrees.
An outsider was appointed Financial Regulator – Matthew Elderfield. Saviour of capitalism, a stickler for the rulebook, we were told. Best of all, he had no connection to the usual cronies.
And when Elderfield quit recently, after just three years on the job, to take a position with a UK bank, many were surprised.
Is his move just personal ambition or is there something more going on? Has Elderfield seen straws in the wind and did this make him decide to move to more solid ground?
Last week, Elderfield made a speech warning that the cost of lax supervision was many, many times the cost of proper regulation. Bizarrely, the media reported this as just another view – balanced against the view of the bankers, that regulation has gone too far.
I’ve had goldfish with better memories than some media folk.
Goldman Sachs, throughout this global crisis, epitomised the morals of the banking business. In Matt Taibbi’s memorable phrase, the bank is like “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money”.
According to The New York Times, Goldman helped that government manoeuvre and the deal was “hidden from public view because it was treated as a currency trade, rather than a loan”.
Why would Goldman do that? Because the Greek politicians “paid the bank about $300m (€230m) in fees for arranging the 2001 transaction, according to several bankers familiar with the deal”.
When Greece imploded, Goldman had moved on to other things, its executives fattened on their notorious bonuses.
The fact that Goldman Sachs and others are leaving the IFSC – well, an active, concerned government would have ministers fanning out across the globe, gleefully welcoming this news. Yell it from the pages of the Financial Times and the Wall Street Journal.
Take a bunch of Reuters and AP reporters to dinner, send Michael Noonan into the Bloomberg TV studios with a big grin on his face.
“We’re glad to see the back of those bastards,” he would say.
And it would ask the question: what are Goldman Sachs hiding? What are they up to that can’t stand the light of effective regulation?
An active, concerned government would use the flight of such people to advertise a financial-services system that won’t be allowed do the kind of things that destroyed economies.
The departure of such types would be a platform from which to promise a financial-services set-up that you can trust.
The framework of regulation – including Elderfield’s position – remains in place. The bankers find this restrictive – so, the pressure is on.
Yesterday, John Bruton, a former Taoiseach, now a hired mouthpiece for the banking business, rebuked President Higgins’s call for an end to the policy of austerity (pushed by banker-friendly types, such as Mario Draghi, a Goldman Sachs old boy). Attack unemployment, Higgins suggested.
Stay the course, Bruton says. He’s on a Dail and ministerial pension of €140,000, on top of his reported six-figure salary for bigging-up the bankers. And he says: “Austerity is always painful.”
The lesson of the banking crisis seemed for a while to be obvious to all. We need banks that serve the economy – not the bankers.
We need boring banks, banks that assess risk, support customers and serve the wider economy – not banks that are fixated on spectacular deals that feed the egos and the wallets of elite layers of hustlers.
Two distinct models of banking. An old one, that kept capitalism relatively stable for decades. And a casino model that emerged from Thatcherism, tied to bloated rewards for the few.
That cut-throat model, which placed the welfare of banks above that of the people, led to the crash. And to the ruinous bank guarantee.
And to the subsequent policies of forcing the debts of bankers and bondholders on to the people. And the costly, disastrous attempts to balance the books through austerity.
Remarkably, the cut-throat model has survived. We needed a clear-out of senior bankers, not as a punishment or as revenge, but to evict a type of specialist we don’t need, who subscribes to a model of banking, and a model of society, that has massively damaged us.
Many of the those who ran the banks into the ground have gone, but their values remain – and are lauded in the highest circles of government, business and the media.
Who replaces Elderfield, and the ground rules under which he or she works, will matter. There will be no sweeping disposal of regulation – we on the outside won’t even see the screws loosened.
Should those bankers now leaving in a huff return in a year or two, we’ll know then that we’re in even bigger trouble.
BANKS had been given a life-saving blood transfusion by taxpayers but returned the favour by charging customers more, the financial regulator has said.
The country’s top regulator, Matthew Elderfield, also accused the banks of not properly contributing to society.
His comments came on the day it emerged that Bank of Ireland is to push up the interest on credit cards by as much as 4 percentage points, in a move that will hit thousands of householders. Many struggling consumers are so short of cash they are using credit cards to juggle their finances.
The new rates, which will be between 0.7pc and 4pc higher, take effect from December 18 next. They apply to purchases on cards. The bank, which got €4.7bn from the taxpayer, said it had not raised rates since August 2011.
Mr Elderfield, who is also the deputy governor of the Central Bank, said banks faced the uncomfortable task of “telling the neighbours who donated blood to them that they need to charge them more as customers”.
Mr Elderfield said returning to profitability was one of the key challenges the banks faced.
“Progress on profitability will only be possible in the interim due to gradual repricing of assets to reflect the cost of funds,” he said.
That implied further interest rate hikes, he said.
AIB has announced two hikes in its variable rates in quick succession. Bank of Ireland has hiked its variable rate by 0.5pc, while Permanent TSB has signalled a rise in fixed rates.
Speaking at an event in UCC, Mr Elderfield said the banks were out of the “critical ward following radical surgery and an extensive transfusion of blood from the Irish taxpayer”.
But, he said, they were still not contributing properly to society as they should and remained weak.
However, the central bank deputy governor confirmed that Ireland may be close to removing the banking guarantee that makes the State responsible for deposits kept in the bailed-out banks, confirming earlier reports in the Irish Independent.
“My view, we are getting close to the position where the changing circumstances arising from successful implementation of the IMF/EU programme and the introduction of the banking union should permit the full removal of the government guarantee,” he said.
In a clear reference to speeches earlier this week calling on the banks to face up to their mortgage problems, Mr Elderfield said the banks should be able to cope with losses even if they fully faced up to the problem.
Lenders had set aside “prudent provisions” for bad loans and retained a “healthy buffer” of additional capital, he said.
Banks wouldn’t know whether they had enough capital to withstand ”extreme loss developments” until they worked out what they could recover or needed to restructure among troubled loans, he said.
Lenders may be encouraged to hoard reserves and restrict lending until a “case-by-case re-underwriting” of soured loans was complete, he said.
A SENIOR Fine Gael figure has accused the brother of bankrupt billionaire Sean Quinn of dishonouring the role of GAA president.
“Politicians are not beyond criticism, but the uncouth language used by Mr Quinn does not befit a man who was president of the GAA, one of the most respected offices in Irish public life,” he said.
Former GAA president Peter Quinn launched a swingeing attack on financial regulator Matthew Elderfield and Irish Bank Resolution Corporation (IBRC) chairman Alan Dukes, among others, at the latest rally in support of the family in Ballyconnell, Co Cavan.
“The language used by Mr Quinn yesterday belongs in the gutter and dishonours the office of Uachtarain of the GAA, which he once held,” Mr Flanagan said.
“Mr Quinn is happy to be seen in public in Northern Ireland with his son (Peter Darragh) who is currently avoiding the sentence handed down to him by a court in the Republic.
“Our courts are a fundamental pillar of our democracy and the law must take its course. It is highly unsatisfactory that some people feel that these standards do not apply to them.”
Former billionaire Quinn, who faces the High Court on Friday to find out if he will be jailed for contempt for asset stripping, was close to tears in front of more than 5,000 people hometown supporters.
His brother was one of a series of speakers who included his daughter Ciara.
Peter Quinn also used his 40 minute speech to declare that the family will be cleared of any wrongdoing in relation to €2.8bn Anglo debts in “an impartial court free from political influence”.
“Neither Anglo nor the media will break the Quinn resolve, neither Elderfield or Dukes, nor Kenny or Noonan or any of the other bolli**s in Dail Eireann, will ever break the Quinns spirit,” Peter Quinn said.
Mr Quinn and his wife Patricia were in tears as prayers and a poem were read for their jailed son, Sean Quinn Junior.
The family are embroiled in a legal battle with Anglo, rebranded IBRC, over the debts and have taken a counter-case again the bank over a loans deal.
Quinn, his son and nephew Peter Darragh Quinn were found guilty of breaching court orders to stop putting up to €500m worth of property assets beyond the reach of the bank.
Sean Junior is appealing his imprisonment at Mountjoy’s training centre, while Peter remains on the run in Northern Ireland.
CHANGES in Europe pose challenges to the €2 trillion Irish funds industry, Taoiseach Enda Kenny said this morning.
“The Government is acutely aware that regulatory developments in Europe pose both opportunities and challengesfor the industry,” MR Kenny told a conference on the fund industry.
“The Government will continue to work closely with allstakeholders to ensure the best representation for Ireland in Europeann egotiations,” he added.
Financial regulator Matthew Elderfield told the same conference that Europe should drive reform of money market funds to lower the risk in the so-called shadow banking sector.
Investor runs on this sector during the international financial crisis “led to a disruption in the flow of finance to the real economy and necessitated dramati interventions by public financial authorities,” Mr Elderfield added.
While Elderfield said his preference is for an “international alignment” between Europe and the US, the US Securities and Exchange Commission may “not be driving further regulatory reform in the short term.”
Money-market mutual funds, which hold short-term debt and are used by clients for liquidity, are part of the so-called shadow banking system, that provide cash globally.