PRESS CONFERENCE:THE GOVERNMENT'S "crisis management" in the aftermath of the banking crisis has been praised by the authors of one of the recently published banking reports.
Klaus Regling and Max Watson complimented the Coalition’s banking rescue operation and fiscal policy when they held a press briefing after addressing an Oireachtas committee yesterday.
“The crisis management after the crisis broke and after all the criticism that we have in our report, and factors that contributed to the crisis, I’m quite impressed, and I think Max also, about the response to the crisis,” Mr Regling said. “It’s better than in most other EU member states.”
Mr Watson said the authorities had “got out in front” of the problem in time. “That was politically difficult I’m sure. I’m not a political expert . . . it really paid off.”
Asked why they did not meet former minister for finance Brian Cowen, Mr Regling said: “We did not ask for a meeting and he did not suggest a meeting so this was not really on our agenda.
“We thought we had the information we needed for that period of time. We know the fiscal papers, they are quite well documented and that was sufficient to come to our conclusions.”
The scale of tax breaks in Ireland, which, Mr Regling said, was the highest of any European Union country, was the “biggest surprise on the macro side”.
The failure to spot the extent of the problems in the banking sector and the rapid growth in credit was also a surprise. “It was very strong – it was not a secret,” he said.
Mr Watson said he was surprised by the concentration of bank lending in property, particularly in commercial property, and with “a couple of dozen” borrowers who were “very dominant”. Coupled with “very bad” quality lending decisions and poor documentation and collateral, it would have been impossible for an economic “soft landing”.
Mr Regling said that even without any tax breaks, there would have been a crisis, although it could have been a smaller one. ”
Domestic factors could not be taken in insolation for causing the banking crisis, he added. International factors were also to blame.
“It is not enough to blame one or two persons or institutions – one has to see this long list of factors that contributed.” There were “quite amazing” failures of governance, he said.
Mr Watson said he did not believe that there was the same “time-bomb” in Irish residential mortgages as they had been in commercial and development property lending, which was the “really dangerous element”.
