Banking inquiry

Former minister for finance Charlie McCreevy gives evidence to the Banking Inquiry

Dan Griffin Wed, Jul 1
 
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  • This event has now ended
  • 14:55
    Things are about to get underway in Committee Room 1, the windowless basment in Leinster House where the Joint Committee of Inquiry in the Banking Crisis (to give it its full name) has been conducting its affairs today.
  • 14:56
    Supporting acts this morning were second secretary general at the Department of Finance Ann Nolan and former second secretary general at the Department of Finance Donal McNally.
  • 14:57
    But today's headliner is former minister for finance Charlie McCreevy. He's about to give his evidence. We should be here until about 6pm.
  • 15:00
    There has been a recurring notion that light touch regulation was an Irish invention, he says. "It was in vogue a long time before I was minister for finance".
  • 15:01
  • 15:04
    In 2001 there was much criticism of the EU reprimand to Ireland over the country's budget and not just from the Irish Government, he says. Other countries believed: "There appeared to be one set of rules for the larger countries and a different book for the smaller states".
  • 15:05
    On the issue of ministers not taking certain advice from their departments, he says: worthwhile intitatives from different administrations would never have seen the light of day if advice from the Department of Finance had been followed.
  • 15:06
    He mentions "the futility of forecasting".
  • 15:08
    When I was minister for finance I was considered a Scrooge, after the crash I was painted as some sort of Santa Claus. He says his statement: if I have it I spend it, if I don't I don't is always misrepresented. He said it in the context of spending cuts. Marian Finucane often clarifies that point.
  • 15:09
  • 15:12
    He mentions the roads, the pension reserve fund and other things the Romans, I mean Fianna Fáil, have done for us. He also takes a swipe at critics who say the Government should have run a budgetary surplus.  In a political democracy it is especially difficult to run anty kind of budgetary surplus.
  • 15:14
    My attitude to property tax incentives: as I said in 2003, under the existing demand for property investment... there is no need to continue these beyond 2004.
  • 15:15
    He's finished his opening statement. A defensive performance so far. You can read it in full here.
  • 15:17
    I found nothing but the highest level of intelluctual capacity in my time at the Department of Finance, he says. But he also says there's nothing being done now that couldn't be done better.
  • 15:18
    A bit of a theme emerging here: It's the government of the day that makes the decisions, there's no such thing as departmental views in government. There are only ministers' views.
  • 15:19
    When Pearse Doherty is minister for finance and Joe Higgins is minister for public expenditure they will get loads of advice and I'm sure they'll ignore it, McCreevy says.
  • 15:20
    Pearse Doherty wants to know whether McCreevy thinks he should have been more cautious.
  • 15:21
    The proof of the pudding is in the eating, says McCreevy. We achieved economic growth of considerable measure and no disaster came to pass in my time as minister for finance.
  • 15:21
    So would that be a "no"? asks Doherty. Should you have been more cautious, based on the advice you were being given? "No," replies McCreevy.
  • 15:25
    McCreevy doing his best to avoid Doherty's question: do you believe there was a property bubble in Ireland before the crisis.
  • 15:27
    Chairman Ciaran Lynch tells McCreevy the question is in order. McCreevy says: I ceased as European Commissioner in 2010, I have not made any comments on Irish public policy in that time despite all types of requests from the media, from journalists of all descriptions...and I'm not going to break it today.
  • 15:29
    "I don't believe there was a property bubble during my time," says McCreevy after more pressing of the matter from Doherty.
  • 15:30
    Pearse Doherty has asked for the meeting to be adjourned because he is not satisfied with how his questions are being answered by McCreevy. Lynch adjourns. The public gallery is cleared. We should be back underway in a few minutes. Should.
  • 15:32
  • 15:35
  • 15:46
    It appears Chalie McCreevy, with some deft stonewalling, has managed to collapse the banking inquiry after about two questions.
  • 15:52
    And we're back.
  • 15:53
    He says that there was a bubble, given the escalation in house prices from 2003 to 2007.
  • 15:54
  • 16:02
    Doherty reads from a report which says property tax incentives accelerated property inflation. McCreevy says that he didn't read the report. He also says that in 2004 he brought forward the closing dates for various schemes. Later ministers decided to extend them.
  • 16:04

    Separating out financial regulation from the Central Bank of Ireland was not a “major factor” in the banking collapse, former minister for finance Charlie McCreevy has told the Oireachtas Banking Inquiry.

    Read Ciarán Hancock's report for the proceedings so far.

  • 16:06
    Doherty questioning McCreevy about appointees to the board of the banking regulator, particularly in light of the lack of experience of a number of them.
  • 16:09
    McCreevy: When you're appointing a board you pick people who you think bring different experiences to the area.  
  • 16:17
    McCreevy says he was in the same class as Sean Fitzpatrick in college. But he says his only dealing with him as a banker was at a lunch when McCreevy was at Finance. He says he contact with him was minimal. I never played golf with him even though he is a very good golfer--"people might like to know that".
  • 16:19
  • 16:21
    A downside of joining the euro is that we gave up control of our interest rate, says McCreevy in response to a question on joining the single currency from Fine Gael TD Eoghan Murphy.
  • 16:30
  • 16:36
    Asked whether upcoming elections influence government behaviour, McCreevy tells Eoghan Murphy: When you make it to government when an election is coming up you'll be very conscious of trying not to do something that will annoy the electorate.
  • 16:38
    Murphy asks whether that's a responsible way to run finances. McCreevy says he thinks his governments' expenditure was all justifiable. Not every pound was spent as well as it could have been but on the whole money was spent on the correct things.
  • 16:46
    McCreevy tells committee that Government would be meeting lobbyists for about two weeks before budget speech from 10 in the morning to 10 at night.
  • 16:55
    Fine Gael's Kieran O'Donnell gets his 10 minute slot now.
  • 16:59

    O'Donnell asks McCreevy whether he believes the decentralisation of government departments was a disappointment. "No, I don't," replies McCreevy.

    I see many great offices all over the country with civil servants decentralised from Dublin, he says. He adds that he feels very sad that they project wasn't carried out to completion.

  • 17:03
    McCreevy says he had the approval of cabinet to announce the plan. He says "I never would have been able to do" if there had been any leak of the details before it was announced in the budget. For that reason, secretaries general and advisors, etc weren't supposed to be privy to the scheme, he says.
  • 17:08
    Coffee time. The meeting has been suspended until 5.25.
  • 17:32
    They're back in public session now after a quick refreshments break. Senator Marc MacSharry is sipping from a coffee cup.
  • 17:36
    Kieran O'Donnell finishes up. McCreevy insists to the TD that property relief extensions did not help inflate the property market.
  • 17:49
    He says the Special Savings Incentive Accounts was a scheme to encourage people to save and denies claim that the SSIAs were a means to "buy" an election.
  • 17:58

    No one in the Department of Finance, the Central Bank or anywhere else thought there was going to be a property collapse, he says. Even the ESRI weren't predicting that as late as 2007, he adds. What did they think was coming? "A soft landing".

     

  • 18:00
    And with that we'll sign off. The committee hearing will continue for another while and Irish Times Finance Correspondent Ciaran Hancock will have a full report later and more coverage in tomorrow's paper. Thanks for reading.