Thursday 17 October 2019

More calls for Neary to go, so why hasn't banks chief resigned yet?

PAINFUL GRILLING: Financial Regulator Patrick Neary can't claim that he didn't see the tough questions coming
PAINFUL GRILLING: Financial Regulator Patrick Neary can't claim that he didn't see the tough questions coming

THE painful grilling by an Oireachtas Committee further increased pressure on Financial Regulator Paddy Neary to resign over the banks fiasco.

But if past experience is any guide, not alone will Neary survive -- he will be promoted.

It was agonising to watch his performance before members of the Oireachtas Committee on economic regulatory affairs.

Instead of coming straight out and telling Patrick Neary that he wasn't up to the job of Financial Regulator and that he should go, the TDs and senators pirouetted around the question instead.


At least Shane Ross had the bottle to tell him: Resign.

Neary can't claim that he didn't see the banks meltdown coming. While no-one could have foreseen the severity of the current downturn, it has been clear for several years that there were problems looming for the Irish banks with their huge property loan books.

And how do we know this? Because the Financial Regulator's own Financial Stability Report, which is published every year, told us so.

Armed with these warnings, you would have thought that the Financial Regulator would have been on his guard when the traffic lights began to turn red. Not a bit of it.

In December 2005, the ECB began to raise interest rates. The Regulator did nothing. That was the first red light he passed through.

In October 2006, house prices stopped rising. That was the second red light Neary ignored. Five months later, in March 2007, house prices started to fall. Once again, Neary drove through the red light.

Then, in August 2007, the credit crunch struck and a month later the UK mortgage bank Northern Rock collapsed. And what did Neary do? Drove on regardless.

This meant that when the Irish banks came within hours of going under a fortnight ago, Neary, despite having had almost three years notice of trouble ahead, seems to have been caught unawares.

In most organisations, such a failure to spot obvious warning signs would lead to a P45. Not in the Irish public service, where there is plenty of precedent for rewarding failure. After all, Neary's boss, Central Bank Governor John Hurley, was secretary general of the Department of Health at the time when it ignored warnings and imposed the illegal nursing home charges on pensioners.

With that sort of record, I confidently expect to see Neary promoted to an even bigger job before long.

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