If the four hours of questioning of Finnish finance expert Peter Nyberg told us anything yesterday, it's that the next three months of the so-called context phase of the banking inquiry will be tough going.
The period up to St Patrick’s Day will involve scene-setting by the committee, with the authors of various reports and a raft of commentators, economists and experts giving their view of the events that led to the banking crash and the subsequent actions by the government and other authorities.
The meat and drink won’t begin until April, when assorted bankers and politicians will be called.
There was little new in Nyberg’s opening statement and subsequent answers to the 11 members of the inquiry committee.
The Finn started off by reminding the committee that it had been three years since his report was published, and he had not had access to the documentation since then as they were “securely deposited” under lock and key somewhere.
He reaffirmed his previous view that this was a “home grown” crash, not “unique” to Ireland. The US, Spain and assorted Scandinavian countries in the 1990s had similar experiences.
He dismissed the idea that there might have been a “soft landing” in the Irish property market if only the credit crunch in the US had not blown up in 2007.
Nyberg cited “group think” as part of the reason why nobody saw the crash coming. He also reiterated his earlier view that responsibility lies with borrowers as well as lenders.
Poor decisions
Individuals and companies made poor decisions about the risks they were taking on in terms of their loans, while some lenders chased profit so as not to be left behind by their peers at a time when it seemed the Irish property market could only go in one direction: upwards.
This is little consolation for taxpayers who are on the hook for a €65 billion bailout of Irish banks.
Nyberg declined to offer an opinion on whether burden-sharing after the crash was fair.
John Paul Phelan of Fine Gael reminded him of an interview he gave in September 2013 when he offered the view that this inquiry would yield little by way of new information in relation to the causes of the crash. Was that still his view?
“I have not changed my mind,” was the answer. “It is still my view that the causes of the Irish crisis are now well known.”
Massively overexposed
What of the auditors? Nyberg is not for sending them to the gallows for failing to spot that their banking clients were massively overexposed to property and that a crash was inevitable.
But he was surprised that the auditors, who are all part of large international networks, did not spot warning signs of a global credit crunch and flag this to the Irish banks.
Nyberg did reveal that he hadn't spoken to anyone from the European Central Bank as part of the 140 or so interviews conducted in advance of the publication of his report. Seems odd, but there you go.
On a couple of occasions, Nyberg said he’d had neither the time nor the resources in the preparation of his report to go searching for the Anglo tapes or to read bank annual reports from the years leading up to the crash.
Never flustered
Nyberg never got flustered during his four hours of questioning. Kieran O’Donnell described him as a wily fox for the way he handled the committee members.
The Finn even managed to raise a chuckle or two. He was asked how badly the Irish banks had misjudged the crisis, with chairman Ciarán Lynch asking him to rate it on a scale of one to 10. Very badly was the polite reply.
Senator Marc MacSharry suggested that yes and no answers might be appropriate to his questions, and promptly got a “Yes and no” reply to his first question.
Today, Rob Wright, a former Canadian deputy minister of finance and author of a report on the crisis for the Department of Finance, takes the hot seat. Hopefully his testimony will be more illuminating.
