John Hurley unaware of ‘contrarian views’ in Central Bank

The former governor of the Central Bank John Hurley said if dissenting views existed ahead of its financial stability reports, they were not made known to him.

Responding to criticism by the bank's former head of financial stability Frank Browne, Mr Hurley said he was "not aware of contrarian views within the Central Bank".

In a statement to the Oireachtas banking inquiry, Mr Hurley wrote: “Other witnesses have also indicated that such views were not raised at Central Bank Board meetings...often attended by the most senior economic staff at the bank.”

The purpose of convening such meetings, he said, was to take into account all views and no serious disagreement on any changes to draft reports came to mind.

“As I have stated it would have been expected that if senior members of staff had a different view they would say so at those meetings. This did not happen.”

Mr Hurley’s response to Mr Browne, published by the Oireachtas banking inquiry on Monday, dealt with a number of factors, including “soft landing” predictions for the housing market which had formed the “consensus view” of bank officials. This turned out not to be the case due to the international recession, he said.

“The bank’s assessment that the more likely adjustment would be gradual was wrong not because of any lack of analysis but rather because of the severity of the worst downturn in 80 years.

“In his comments Mr Browne states that he did not believe that at senior levels in the bank there was much sense of the importance of financial stability.

“This is simply not true. The financial stability function...was taken extremely seriously.”

Liam Barron, director general from 2000 to 2007, also rejected Mr Browne’s assertions.

In his statement to the banking inquiry, he said all work produced at the time, including Mr Browne’s, was of the highest quality.

“It is most regrettable that he has chosen not to defend his work rather than making statements which I consider to be unfounded and baseless,” he wrote.

“I categorically refute Frank Browne’s central narrative which alleges senior management of the Central Bank were warned about the problems, including the property bubble, in the pre-crisis period and ignored these warnings.

“This is a grave accusation and appears to have the effect of protecting his own reputation while questioning the reputations of others, all now in retirement.”

Mr Barron said Mr Browne’s views “amounted to revisionism” based on “self-serving hindsight”. They were “selective, vague and the subsequent confusion replete in his comments render them difficult to address”.

He said Mr Browne had rejected views by Professor Morgan Kelly in 2006 that house prices would fall by up to 50 per cent over nine years. Rather, he embraced the views of the International Monetary Fund (IMF) that the experience of past housing market crashes would not be repeated.

“It is important to stress that the bank’s views, including those of Frank Browne, on property prices were mainstream,” said Mr Barron.

“The reality, however, is that Frank Browne did not warn about the bubble but rather provided reassurance that there was no evidence of a bubble.”

Mr Barron's successor Tony Grimes also responded, saying there were inconsistencies and "numerous errors of fact" in the claims set out by Mr Browne.