Duke of Marmalade
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Bronte the point I was making was that taxpayers would not be out of pocket. Do you accept that point?
Dail committee savages Financial Regulator
- Thread starter Brendan Burgess
- Start date
Sorry I do not accept that point but I'm open to changing my mind if your arguments convince me. From where exactly do you think the banks are going to get the money to pay?
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If you don't mind me saying so, the fact that you were chairman of the consumer panel of the Financial regulator would make me think that you could be biased to be more positive as you would be I assume dealing with people from this office on a personal level and that will always change things. (I do not know what being Chairman consists of)
I don't have any problem with you pointing out the good things the regulator does, but, aren't you only pointing out what they should be doing, why should they be praised for doing what is in essence their job?
As for overcharging, this has not changed at all, so what is the regulator doing about this, there was the Bolger case two weeks ago which apparently was a systematic system of overcharging. What is the regulator going to do about that in relation to other businesses as I find it incomprehensible that only one business was targeted over a ten year period. Why doesn't the regulator put in place a system whereby people have to report if a bank is overcharging (or whatever misdeed is involved), that it is the responsibility of the individual employee in the bank to point out these things directly to the regulator - a bit like the Sarbanes Oxlay act brought in after the Enron scandal but tweaked to apply to financial institutions. For there to be overcharging there must be someone in IT who creates the accountancy programmes to do the overcharging, there must be a person who administers it, there must be bright staff who realise there is overcharging, there must be customers who bring it to the attention of bank managers etc. A kind of loyalty and integrity to the customer rather than to the bank would also be nice from staff. That is the kind of thing I wish the regulator was doing. (Sorry if this is all over the place I'm not as eloquent as others with my points)
If you look at Spain there is a lesson there for our regulator. Although Spain is suffering from a post property-boom hangover, its major banks are in a relatively strong financial position. Whilst many of the of the local 'cajas' will fail, the large Spanish bank have been acquiring bargain banking assets in the UK and US. The conservative and proactive Spanish Central Bank and financial regulator have helped the main banks avoid many of the problems that have beset the Irish banks. Ditto the French regulator.
Brendan Burgess
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Hi Bronte
The[broken link removed] is appointed by the Minister for Finance, and not by the Financial Regulator.
Its role is to comment on the performance of the Financial Regulator and represent the interests of consumers.
So I spent three years chairing a committee of 20 people. We produced various annual reports and performance reviews. They represented the consensus views of the Panel. They were not written from a crusading point of view. They were not written from a political or media point of view. We collected the evidence from various sources. We interacted with the staff of the FR. And we produced balanced reports based on evidence.
You can read the full reports on the [broken link removed].
We did not hold back our criticism. Nor did we hold back our praise when it was due. We also tried to understand the difficulties facing the regulator - prudential supervision is not really something which they can go on the Joe Duffy show and share their concerns about particular banks.
Am I biased? I doubt it. If there was any bias arising from my dealings with the senior staff in the FR, it would be a negative bias. But I would always try very hard to overcome any such bias.
I am not always right and I am always open to correction. But I do try to base my assessments and opinions on facts, rather than on headlines.
Brendan
The[broken link removed] is appointed by the Minister for Finance, and not by the Financial Regulator.
Its role is to comment on the performance of the Financial Regulator and represent the interests of consumers.
So I spent three years chairing a committee of 20 people. We produced various annual reports and performance reviews. They represented the consensus views of the Panel. They were not written from a crusading point of view. They were not written from a political or media point of view. We collected the evidence from various sources. We interacted with the staff of the FR. And we produced balanced reports based on evidence.
You can read the full reports on the [broken link removed].
We did not hold back our criticism. Nor did we hold back our praise when it was due. We also tried to understand the difficulties facing the regulator - prudential supervision is not really something which they can go on the Joe Duffy show and share their concerns about particular banks.
Am I biased? I doubt it. If there was any bias arising from my dealings with the senior staff in the FR, it would be a negative bias. But I would always try very hard to overcome any such bias.
I am not always right and I am always open to correction. But I do try to base my assessments and opinions on facts, rather than on headlines.
Brendan
Duke of Marmalade
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Let's say the banks get it from charging customers, maybe reducing those 6% deposit rates. Are you saying these customers are taxpayers and therefore taxpayers are paying?
By "taxpayers" I mean the public finances, but if you mean anybody who is paying taxes including bank shareholders, staff and customers well you are speaking a rather vacuous truism.BTW I thought your personal attack on the Boss was gratuitous though I note he has given you the courtesy of a reasoned response.
Duke you didn't answer my question - where are the banks going to get the money to pay? Maybe I don't understand what you mean, actually I don't.Let's say the banks get it from charging customers, maybe reducing those 6% deposit rates. Are you saying these customers are taxpayers and therefore taxpayers are paying?
BTW I thought your personal attack on the Boss was gratuitous though I note he has given you the courtesy of a reasoned response.
In relation to the owner of AAM I did not intend to be gratuitous, and I apologise if it comes across that way but this is a discussion forum and he says he welcomes all viewpoints (I think, though someone else got deleted earlier today). I'm not a banking expert, just an ordinary joe soap who is trying desperately to understand this credit crisis (which I still don't) but I am one hell of a mad taxpayer particularly at banks. I also think AAM does a great job as does it's boss whom I've never heard speak so I can't coment on that but at least you feel he's on our side like Shane Ross (I know you'll all groan) but they do the job of eloquently fighting for the little guys and I'll always be on their side. I'm a bit lost really as to where I was gratuitous.
LennyBriscoe
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Shane Ross has called for the resignation of the FR. So Brendan and Shane Ross are not on the same side!
Brendan Burgess
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Hi Bronte
I didn't take offence at your comment. The tone struck me as a fair question as distinct from an abusive accusation. (Duke thanks for defending my honour.)
Just to assure you, no one gets banned for disagreeing with me or with anyone else.
When people are abusive to me or to any other poster or otherwise in breach of the posting guidelines, their abusive posts are deleted and they receive a warning. Even if a user is banned, their posts which comply with the Posting Guidelines are left in public. So Camry was not banned for disagreeing with my opinions or for pointing out errors. The posts for which he was banned, have been deleted.
Brendan
I didn't take offence at your comment. The tone struck me as a fair question as distinct from an abusive accusation. (Duke thanks for defending my honour.)
Just to assure you, no one gets banned for disagreeing with me or with anyone else.
When people are abusive to me or to any other poster or otherwise in breach of the posting guidelines, their abusive posts are deleted and they receive a warning. Even if a user is banned, their posts which comply with the Posting Guidelines are left in public. So Camry was not banned for disagreeing with my opinions or for pointing out errors. The posts for which he was banned, have been deleted.
Brendan
Brendan I appreciate you taking the time to explain a little more about the role of the Consumer Panel to the FR. One thing that seems to stand out from a cursory look at the current panel members is their diverse backgrounds (lawyers, accountants, teachers, etc). There doesn´t seem to be a single economist or anyone with investment banking experience. Was the makeup of the group similar when you were chair? If so, how comfortable were you that important indicators of the regulatory authority´s performance were not being overlooked? For example there were economist friends of mine telling me that a figure of 33% for money creation considering our GDP was an enormous warning sign a few years back.
Brendan Burgess
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Hi Afuera
The composition was a matter for the Minister, as advised by the Department of Finance.
Sure we could have had an economist. But that would not really have added that much. The Central Bank and Financial Regulator are full of economists. The media and every stockbroking house are full of economists. I would doubt that the appointment of one to the Consumer Panel would have given us some special foresight to predict that the international banking system would freeze.
The composition was a matter for the Minister, as advised by the Department of Finance.
Sure we could have had an economist. But that would not really have added that much. The Central Bank and Financial Regulator are full of economists. The media and every stockbroking house are full of economists. I would doubt that the appointment of one to the Consumer Panel would have given us some special foresight to predict that the international banking system would freeze.
I have read the transcipt and am apalled. FR was asked about liquidity and answered by speaking about solvency. That's Yes Minister stuff. He didn't give a straight answer and just dodged the question.
Secondly, there is absolutely no talk of Basle II which is driving a lot of the problems.
From what I have read from both sides of the Atlantic, the knowledge of banking law amongst mainstream commentators (economists or otherwise) is terrible.
Secondly, there is absolutely no talk of Basle II which is driving a lot of the problems.
From what I have read from both sides of the Atlantic, the knowledge of banking law amongst mainstream commentators (economists or otherwise) is terrible.
Duke of Marmalade
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I'm obviously v.v. bad at getting my point across. The banks will pay for this from one or other of its three stakeholders - shareholders, staff or customers. That is not what I mean by the "taxpayer" and it is not what I thought you originally meant, but of course you are literally correct these people probably do pay taxes.
"Gratuitous - Unwarranted", it was my personal opinion.
scapegoat suggests he's the only one who should suffer the consequences. I agree he should not be the only one made to resign, I would suggest the senior management of most of the banks have questions to answer to their shareholders. If I had a significant shareholding in any of the banks, I'd be demanding resignations.
Brendan, I don't see why you are placing so much emphasis on the predictability or not of the credit crunch. The only thing that should be important to the financial regulator, and those overseeing its performance, is whether it is being prudent. The fact that the board overseeing the FR is politically chosen and may not be trained or have the knowledge to identify what passes for prudent regulatory behaviour appears to be an issue.
Sounds to me like its nobodys fault!!!!
The banks, the government, the regulator oh my . . .
Yes there is a moral duty on behalf of all concerned to protect the public, but at the end of the day nobody forced people to take out 100% mortgages or to debt themselves up to the hills. Its like saying its the governments fault that we have such a "culture" of binge drinkers when we as a society have allowed ourselves to get into this mess (in a matter of speaking).
Me, I personally think that one of the biggest problems in this whole saga is accountability. Nobodys getting really punished properly for the crimes that have been done, but then again is that really surprising? If there were proper punishments for these "rogue traders" it would certainly make them think twice about doing the same unforgivable transactions in the future. It might not fully prevent it, but its a start.
If I dont pay my T.V. licence for a station I dont watch, I could potentially go to prison, but if I gamble a nations deposit on dodgy bets, I get to retire a millionaire . . A bit Simplistic perhaps (even Joe Duffy'ish), but sometimes the obvious explanation is the right one, if not one with far more dynamics involved.
The banks, the FR, the government have all contributed one way or another to the problem. We, the consumers have been lambs to the slaughter, but like sheep have followed the flock into the slaughterhouse and have to take the responsibility of that role.
Accountability . . .
There is a culture in this country of looking for somebody else to blame for things that happen to us, irrespective of how involved we are in the mess. We voted in the government, we did not protest at them pis*ing away our money (when the good times rolled), we didnt demand a tougher regulation on banks even though it was blatantly obvious that . .
Our government mirrors its people, they are reactive rather then pro-active. They only respond to real protests or real threats. Not people phoning in the Joe Duffy show or people having a moan about it in a pub or on a website.
Anybody who laughs at the U.S. for voting Bush in twice, you know the saying about throwing stones in glasshouses . .
That said it seems to be we, the public, have ended up worse off then the Brandy swirling suits at the top of the pyramid . . . While I do accept that the "bailout" and all that has gone with it was necessary for us all, I do not accept that the appropriate bodies responsible for protecting the public have done their job properly. Prevention is better then cure, quoting other countries practises does not excuse negligence or ignorance. . .
If this is not correct, rather then discussing who is'nt at fault for these problems, could somebody actually say who is?
Greed denotes desire to acquire wealth or possessions beyond the needs of the individual, especially when this accumulation of possession denies others legitimate needs or access to those or other resources.
The banks, the government, the regulator oh my . . .
Yes there is a moral duty on behalf of all concerned to protect the public, but at the end of the day nobody forced people to take out 100% mortgages or to debt themselves up to the hills. Its like saying its the governments fault that we have such a "culture" of binge drinkers when we as a society have allowed ourselves to get into this mess (in a matter of speaking).
Me, I personally think that one of the biggest problems in this whole saga is accountability. Nobodys getting really punished properly for the crimes that have been done, but then again is that really surprising? If there were proper punishments for these "rogue traders" it would certainly make them think twice about doing the same unforgivable transactions in the future. It might not fully prevent it, but its a start.
If I dont pay my T.V. licence for a station I dont watch, I could potentially go to prison, but if I gamble a nations deposit on dodgy bets, I get to retire a millionaire . . A bit Simplistic perhaps (even Joe Duffy'ish), but sometimes the obvious explanation is the right one, if not one with far more dynamics involved.
The banks, the FR, the government have all contributed one way or another to the problem. We, the consumers have been lambs to the slaughter, but like sheep have followed the flock into the slaughterhouse and have to take the responsibility of that role.
Accountability . . .
There is a culture in this country of looking for somebody else to blame for things that happen to us, irrespective of how involved we are in the mess. We voted in the government, we did not protest at them pis*ing away our money (when the good times rolled), we didnt demand a tougher regulation on banks even though it was blatantly obvious that . .
Our government mirrors its people, they are reactive rather then pro-active. They only respond to real protests or real threats. Not people phoning in the Joe Duffy show or people having a moan about it in a pub or on a website.
Anybody who laughs at the U.S. for voting Bush in twice, you know the saying about throwing stones in glasshouses . .
That said it seems to be we, the public, have ended up worse off then the Brandy swirling suits at the top of the pyramid . . . While I do accept that the "bailout" and all that has gone with it was necessary for us all, I do not accept that the appropriate bodies responsible for protecting the public have done their job properly. Prevention is better then cure, quoting other countries practises does not excuse negligence or ignorance. . .
If this is not correct, rather then discussing who is'nt at fault for these problems, could somebody actually say who is?
Greed denotes desire to acquire wealth or possessions beyond the needs of the individual, especially when this accumulation of possession denies others legitimate needs or access to those or other resources.
IFRSA problem lies in its dual mandate of prudential banking supervision and consumer protection where it is accepted that both have suffered from being sighted within one regulatory body. The original government decision required the McDowell committee to only consider a super regulator having a dual mandate. The central bank, department for finance, ECB and OECD objected to the separation of prudential supervision from the central bank role whilst the McDowell committee recommended an FSA type regulatory authority separate from the central bank. What we got was a compromise which undermined both mandates. The sop was the establishment of two consultative panels which have become largely captive of the Regulator.
Banking supervision adopted a principles based approach which broadly works on the basis of principles of prudential behaviour and desired outcomes. It is up to a bank to translate principles into internal policy and rules etc providing the desired outcome is achieved – this contrasts with the FSA and Fed approaches which set out detailed rules which banks must comply with, although the FSA as late as 2007 signalled a shift to principles based supervision.
Both approaches were found wanting during the credit crunch principally due to the reliance of banking supervisors on open market discipline – that is banks etc managing counterparty risks which in turn was a factor of credit rating agency effectiveness. Greenspan has admitted that this did not work and hence the meltdown.
So regulators are to blame for believing in free market self discipline which worked for 40 years according to Greenspan and others who maintained it was cheaper to let asset bubble run their course. Bernanke has said that in future bubbles will need to be “controlled”.
But as far as Ireland’s domestic property bubble is concerned prudential supervision appears not to have as been effective as it could have been in controlling the property boom excess from 2003 onwards. Although it sounded warnings and took action it did so within the context of governmental policy to allow the property market to operate freely without intervention except of course to stoke it up through tax breaks. A strong independent regulator, free of departmental oversight may have stood its ground earlier and prevented banks from engaging in reckless lending.
Secondly a strong independent consumer protection agency could have insisted on protections similar to France and Australia where product features, lending assessment etc are controlled to protect consumers from the excessive exuberance of credit led property bubbles.
One thing is certain both banking and consumer interests consider the IFSRA dual mandate as flawed and in need of review. Whether this takes the form of an independent banking supervisor allied to the central bank and separate consumer protection agency is it appears down to government policy that until now has insisted on combining industry regulation with consumer protection (banking & utilities for example). What’s unnerving is the original McDowell report found the combination of banking supervision and consumer protection to have been the exception rather than the norm yet it recommended a dual mandate super regulator and sowed the seeds of infectiveness in both.
Banking supervision adopted a principles based approach which broadly works on the basis of principles of prudential behaviour and desired outcomes. It is up to a bank to translate principles into internal policy and rules etc providing the desired outcome is achieved – this contrasts with the FSA and Fed approaches which set out detailed rules which banks must comply with, although the FSA as late as 2007 signalled a shift to principles based supervision.
Both approaches were found wanting during the credit crunch principally due to the reliance of banking supervisors on open market discipline – that is banks etc managing counterparty risks which in turn was a factor of credit rating agency effectiveness. Greenspan has admitted that this did not work and hence the meltdown.
So regulators are to blame for believing in free market self discipline which worked for 40 years according to Greenspan and others who maintained it was cheaper to let asset bubble run their course. Bernanke has said that in future bubbles will need to be “controlled”.
But as far as Ireland’s domestic property bubble is concerned prudential supervision appears not to have as been effective as it could have been in controlling the property boom excess from 2003 onwards. Although it sounded warnings and took action it did so within the context of governmental policy to allow the property market to operate freely without intervention except of course to stoke it up through tax breaks. A strong independent regulator, free of departmental oversight may have stood its ground earlier and prevented banks from engaging in reckless lending.
Secondly a strong independent consumer protection agency could have insisted on protections similar to France and Australia where product features, lending assessment etc are controlled to protect consumers from the excessive exuberance of credit led property bubbles.
One thing is certain both banking and consumer interests consider the IFSRA dual mandate as flawed and in need of review. Whether this takes the form of an independent banking supervisor allied to the central bank and separate consumer protection agency is it appears down to government policy that until now has insisted on combining industry regulation with consumer protection (banking & utilities for example). What’s unnerving is the original McDowell report found the combination of banking supervision and consumer protection to have been the exception rather than the norm yet it recommended a dual mandate super regulator and sowed the seeds of infectiveness in both.