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Questions & Answers on the Banking Inquiry

Posted on by David Murphy

The Banking Inquiry has been a long time in the making, but has a tight timetable to deliver its report

The Banking Inquiry has been a long time in the making, but has a tight timetable to deliver its report

By Business Editor David Murphy

Why is the Bank Inquiry important?
The banking crisis cost a gross €64bn, wrecked Ireland’s reputation and set back the lives of thousands of people who suffered the loss of employment and higher taxes.

Four major reports were carried out as to why the collapse happened. Those studies were to be followed up by a statutory inquiry. Now, six years after the bank guarantee, it is finally beginning.

What did the reports say?
Central Bank Governor Patrick Honohan’s report examined the failure of regulation which contributed to the collapse. It concluded regulators weren’t sufficiently challenging of banks.

A second report by Finnish Peter Nyberg examined the causes of the crisis and said herd-like behaviour and “groupthink” may have been key drivers of financial instability.

A third report by two experts, Klaus Regling and Max Watson, examined the economic backdrop to the crash and how the banks lost the run of themselves.

A fourth by former Canadian deputy minister for finance Rob Wright called for a series of urgent changes in the Department of Finance. He called for the Department’s structure, internal working methods and professionalism to be overhauled.

What more is left to say?
Learning what happened in the crash is the key to ensuring it does not reoccur. The public, who paid for the collapse, have yet to hear the official version of what happened from the key protagonists: bankers, regulators, civil servants and politicians.

So far the State’s probe into what happened has consisted of expert reports instead of direct on-the-record testimony from the people involved.

Are there any hitches?
Yes, plenty. Some of the key figures are facing criminal charges. Obviously probing something that is before the courts is not permitted so those areas will be avoided.

Another issue is that witnesses may decline to answer questions for matters of confidentially, which members of the Inquiry have been told will have to be respected. That could mean those involved in the bank guarantee could decline to answer due to Cabinet confidentiality.

What is the format going to be?
The first phase of the inquiry will look at the context of the banking crash. The first witness will be Peter Nyberg, who appears on Wednesday December 17th. The following day Rob Wright gives evidence, and Patrick Honohan appears on January 15th.

The crunch will come in the so-called Nexus phase.

This will focus on evidence from key players in the crisis. It is due to happen in April. According to the Banking Inquiry, it will hinge on “three broad elements – banking systems and practices, regulatory and supervisory systems and practices; and crisis management systems and policy responses and how they interacted”.

The Inquiry won’t name who it is going to call until it has contacted them. However, it is likely former Taoiseach Brian Cowen, ex-financial regulator Patrick Neary and the CEOs of Bank of Ireland and AIB respectively Brian Goggin and Eugene Sheehy will be called to appear, among others.

How long will it take?
The Inquiry is due to deliver its report by November. The deadline is tight.

Perhaps the biggest difficulty is that if there were to be a general election before it concludes it would be up to a new administration to decide whether it would continue the work of the Inquiry.

2014′s highs and lows in Science & Tech

Posted on by Will Goodbody

The Rosetta story had it all

The Rosetta story had it all

By Will Goodbody, Science & Technology Correspondent

It’s awards season. That time of the year, when organisations everywhere reflect on the 12 months past, and acknowledge the achievements of their members and others. So not to be out done, the RTÉ News Science & Tech department (numbering one) has decided to hold an awards ceremony all of its own. We think it is only fitting to recognise the contributions, the highs and the lows of the tech and scientific community here and internationally. In keeping with the brief, the awards, prizes and even the ceremony itself will be entirely virtual. So here goes…

BEST STORY– ROSETTA/PHILAE:
This was the story that had it all. It began with a long (10 years), protracted build-up, full of tension and excitement. Then came the waking-up event in January, when the comet chasing probe awoke from a two year slumber. August saw Rosetta’s emotional rendezvous with the dirty lump of snow and ice, Comet 67P, which it had chased for billions of kilometres around the solar system. And finally in November, the dramatic dropping of the Philae lander onto its surface. As science stories go, it was extraordinary, particularly when one considers the mission was dreamt up, designed and built over a decade ago. It has also yielded loads of interesting science, and will continue to into 2015. It’s the story that keeps on giving.

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Realities of regulation causing unease

Posted on by David Murphy

Many blamed Ireland's property crash on poor regulation - but the prospect of tighter rules is still meeting resistance

Many blamed Ireland’s property crash on poor regulation – but the prospect of tighter rules is still meeting resistance

David Murphy, Business Editor

During the crash critics rightly complained that poor financial regulation had allowed the banks run wild, pitching the financial system into the abyss.

The new regime at the Central Bank, led by Governor Patrick Honohan, has endeavoured to re-establish independent regulation.

But for some the prospect of rules made by an autonomous regulator are proving difficult to stomach. Continue reading

Tax trends in the OECD

Posted on by Sean Whelan

Ireland's tax burden is below the OECD average - but personal income taxes are higher

Ireland’s tax burden is below the OECD average – but personal income taxes are higher

By Sean Whelan, Economics Correspondent

The OECD has been looking at the impact of the economic and financial crisis on taxation.

It’s part of their regular “Revenue Trends” series, with tax data going back to 1965. So what does it tell us? Continue reading

Draghi drags feet on QE

Posted on by Sean Whelan

The ECB continues its slow march towards quantitative easing

The ECB continues its slow march towards quantitative easing

By Economics Editor Sean Whelan

So, no quantitative easing this month – no surprise there.

But the European Central Bank news conference by Mario Draghi was peppered with references to QE, and a statement from the ECB president that a decision may be taken on using QE early in 2015.

Which, in the long march of the ECB towards QE, counts as another nudge forward. Continue reading

Broadband plan must deliver for rural Ireland

Posted on by Will Goodbody

 

700,000 addresses in rural Ireland will require the state to provide high speed broadband

700,000 addresses in rural Ireland will require the state to provide high speed broadband

 

By Will Goodbody, Science & Technology Correspondent

Rural dwellers and business people could be forgiven for greeting today’s news of yet another plan to roll out state subsidised high-speed but affordable broadband to the non-commercially covered areas with a snort of disillusionment. After all, this by some counts is the fifth such version of a plan which has time and time again failed to deliver a satisfactory result or indeed in some cases any service for thousands of people.

The new plan is only in the early stages. But the idea is this. The Department of Communications, Energy and Natural Resources spent the last year talking to broadband operators about where they plan to build high speed broadband networks between now and the end of 2016. Out of that they have built an interactive map, which county by county, parish by parish, street by street and house by house shows where commercial high speed broadband will be available. And more importantly, where it won’t, because it is not commercially viable. In total, there are 700,000 premises out of a total of 2.3m which need help.

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Noonan pricks the bubble in AIB shares

Posted on by David Murphy

The State's winding down of its shareholding in AIB could take decades

The State’s winding down of its shareholding in AIB could take decades

By David Murphy, Business Editor 

You may have heard of somebody talking up shares, but talking them down is less frequent.

That is what Finance Minister Michael Noonan has been doing by describing AIB’s stock as “overvalued” and attempting to prick the bubble in the share price. Continue reading

Communications breakdown hobbles Irish Water

Posted on by David Murphy

Irish Water's failure to communicate its strategy is a key weakness

Irish Water’s failure to communicate its strategy is a key weakness

Here is a question – how much of the Irish Water controversy can be explained by poor communications and the failure to convincingly convey its strategy?

As the Government prepares to unveil its new package of sweeten the bitter pill of water charges next week, it should also consider the company’s public relations.

Contrast the water demonstrations to the reaction to the property tax. There are no protests about the levy on homes, people get nothing in return for paying and for most homeowners it is much more expensive than proposed water fees.

Recently Irish Water replaced its external public relations firm FleishmanHillard with Murray Consultants. But Irish Water continues to fall at the first hurdle despite hiring new expert advice.

This week RTÉ News ran a story that many householders may not be able to claim on home insurance if they get significant water bills caused by a leaks.

Irish Water says it will fix the first leak in a householder’s garden or yard for free. The first leak within a home or the second one in a garden or yard would be the responsibility of the occupier.

Regardless of the merits of its policy, the company has a comprehensive answer to the questions of leaks.

Despite the presence of media advisors, both within and outside Irish Water, the company would not offer an interviewee for television to fully explain its policy on air. Instead it was left to Taoiseach Enda Kenny to articulate the strategy in the Dáil.

It may seem like a minor issue, but it exemplifies why the company continues to lose its public battle. If it does not have the courage of its own convictions and won’t defend its policies why should taxpayers have faith in the organisation?

One of the functions of any chief executive in a company such as Irish Water is to communicate their strategy clearly to the public. The organisation’s boss John Tierney has failed in this regard.

Many of those in the semi state sector held Mr Tierney in high esteem but he lacks the required experience to run a customer-focussed organisation.

Perhaps it is unfair to single out Mr Tierney. It is also a function of the board to ensure the company has a robust strategy and that its plans are articulated.

One of the most fundamental errors made by Irish Water was to assume it would be acceptable to pay bonuses to staff when many of its customers had suffered pay cuts, tax hikes or had lost their jobs.

A striking feature of interviews with anti-water charge protesters is that some of the demonstrators accept paying for supplies but have issues with Irish Water itself.

It highlights the fact that charging for supply is only part of the problem.

The other part is the failure to communicate its strategy in an understandable manner to the public.

Irish Water’s head office on Talbot Street in Dublin does not even carry a logo on its exterior. It is hardly a good first step in building public trust.

David Murphy, Business Editor
Comment via Twitter @davidmurphyRTE

Fear and loathing on mortgage arrears

Posted on by Sean Whelan

Governor Honohan's mortgage proposals have been met by some unease in banking circles

Governor Honohan’s mortgage proposals have been met by some unease in banking circles

The fear and loathing over the Central Banks plan to impose an 80% Loan-to-Value limit on mortgage lending is somewhat overdone.  Continue reading

Five Things I’ll Remember About Web Summit 2014

Posted on by Will Goodbody

 

Bono was among the final speakers at this year's Web Summit

Bono was among the final speakers at this year’s Web Summit

By Will Goodbody, Science & Technology Correspondent

The Web Summit is over for another year. The three day event was broadly speaking a tremendous success for the organisers, the tech community here in Ireland and the wider economy. Time will tell what business was actually done at and around it. But anyone who was in Dublin City over the last week, couldn’t but have noticed the buzz, the people, the packed restaurants and bars, and the smiling visitors.

There were many highlights and memorable moments. But here are five things I’ll remember about Web Summit 2014.

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