As a response to the unprecedented difficulties in the banking sector the Minister for Finance has established a two pronged investigation into what went wrong. First, two preliminary reports into the banking system have been commissioned. These will be followed by the establishment of a statutory commission of investigation. This Commission will use the two reports to springboard its enquiries.
The first report will be written by Klaus Regling and Max Watson. Mr. Regling, an economic and financial consultant, is also a member of the Issing Commission appointed by Chancellor Merkel to advise the German Government on the reform of financial regulation. Mr Watson is a Fellow of Wolfson College, Oxford and formerly of the IMF. The second report will be authored by Patrick Honahan, Governor of the Central Bank of Ireland.
The Government’s intention is that both reports will be complete by May 2010 and then the Commission will be set up. It will have wide powers of investigation, including to compel witnesses and to gather documentation. While it can have its hearings in public in certain circumstances, it is most likely that the hearings will be held in private. This has caused controversy because certain groups feel this means the Commission’s report will be a whitewash. However, private hearings will allow bank officials to speak freely about commercially sensitive information. It is intended that the Commission will complete its work by the end of 2010.
Separately, civil and criminal enquiries are also being carried out by various State bodies such as, the Gardaí (police), the Director of Corporate Enforcement and the Financial Regulator. These have resulted in raids on premises (including Anglo Irish Bank) for gathering evidence. Recently former Chairman, Sean Fitzpatrick, and former Finance Director of Anglo Irish Bank, William McAteer, were arrested and questioned by the police.
It remains to be seen what conclusions these investigations will reach or indeed whether there will be any civil or criminal action arising out of the events surrounding the banks’ financial crisis in Ireland.