herald

Friday 15 December 2017

Guarantee 'sank whole nation', bank inquiry told

Prof Bill Black
Prof Bill Black

The Irish bank guarantee was the "most destructive own goal in history", an international expert on white collar crime has told the Banking Inquiry.

The decision to issue the 2008 blanket bank guarantee was described as the worst decision in history because it "sank an entire nation".

Prof Bill Black also stressed that we are still vulnerable to the practices which caused the banking crisis saying that financial regulation has not been sufficiently transformed to protect us.

The Irish banking crisis was "the most easily preventable" crisis "you could ever imagine" he said.

Prof Black, who wrote the book The Best Way to Rob a Bank is to Own One, told the Inquiry today that he was offering his services free to train Irish regulators and prosecutors to deal with our economic problems.

PATTERNS

The Associate Professor of Law and Economics at the University of Missouri-Kansas City said banking crises follow characteristic patterns that could be identified before the crisis stage.

Funding institutions likely to cause massive losses could be identified and action taken while these institutions were still recording massive profits.

He described the recipe for disaster as having four key ingredients - grow like crazy, make absolutely terrible loans, extreme leverage and set aside no meaningful loss reserves. Prof Black explained that if people had followed the advice they give their children about things seeming to be too good to be true then "there would be no crisis".

hnews@herald.ie

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