Pat Neary Retires - latest Anglo victim?

[Sunny]

Pat Neary and two of his colleagues made a presentation to the Oireachtas committee and they were all very happy with the great work done by the Financial Regulator.

I contacted the committee as I felt that they had not fully understood the situation and I was invited to give evidence which I did, which gave a far harsher, more balanced view of the Regulator than they were used to getting.

The pendulum has now swung the other way, where there is a blood thirsty group looking for a sacrificial victim. That is just as unfair as the uncritical assessment of the Regulator.

The Oireachtas and the broadsheets often take a tabloid approach. That is what is being taken here. It's wrong. It's unfair. And the unfairness needs to be highlighted.

Brendan

Whats unfair Brendan? I am not interested in sacrificial lambs and I resent you implying that my point is just some sort of cheap tabloid shot at someone. I am merely pointing out that I am tired of people in positions of power in both the private and public sector getting high salaries and pension entitlements that they can't lose and taking no repsonsibility for what happens on their watch. If thats tabloid, then so be it. If your definition of taking responsiblility is taking early retirement on a pension of €130,000 a year then so be it.

And Brendan, I talk to foreign investors every day. I also have had plenty of dealings with the regulator. I know what opinion people have of them and it was never great. Now they have lost all respect. I know of business that has been pulled from this country because of what happened with Sean Fitzpatrick and the actions of the regulator.

I know you criticised the regulators actions with regard to consumer protection. You balanced this with priase by saying to the same joint committee in June 2008

"The Financial Regulator supervises the solvency and liquidity of Irish financial institutions very well. Irish banks are conservative in their lending and none has been exposed directly to the subprime lending problems although all are suffering from the subsequent credit crunch. The Financial Regulator seems to have been well ahead of the game on liquidity reporting."

"The Financial Regulator has won international recognition for its appropriate regulatory regime for the funds industry. It does not overregulate or underregulate; it gets it about right"

Do you still feel the same?

 

[Duke of Marmalade]

Sunny, as I understand your point you want a fundamental change in society's economic paradigm. The current position is that what you have earned you have earned and what you have sold you have sold. Only in the event of proven fraud can these transactions be unwound. PN had earned his FULL retirement package over 40 years, there was nothing ex gratia in his award and it was not early retirement. You protest your innocence of the witchhunt against PN and yet you demand the illegal confiscation of his TFLS to be the first salvo in the launch of your new economic paradigm.

 

[Brendan Burgess]

"The Financial Regulator supervises the solvency and liquidity of Irish financial institutions very well. Irish banks are conservative in their lending and none has been exposed directly to the subprime lending problems although all are suffering from the subsequent credit crunch. The Financial Regulator seems to have been well ahead of the game on liquidity reporting."

"The Financial Regulator has won international recognition for its appropriate regulatory regime for the funds industry. It does not overregulate or underregulate; it gets it about right"

Do you still feel the same?

I would word it differently. The main point I was making was that Irish banks had not bought syndicated sub-prime loans. No one on the Oireachtas committee challenged the assessment of lending as "conservative". Now everyone is saying that the dogs in the street knew that the banks had lent too much to property. In retrospect, this is fine. But the politicians were not saying it.

The regulation of the funds industry is done very well. I have seen nothing to challenge that. I would add that The Credit Union Regulator's attempts to regulate unwilling credit unions has been very appropriate but when a Credit Union goes to the wall, the FR will again get blamed for being too lax with them.

Sunny, I am sorry that you are taking offence. But I would describe the harrassment of Pat Neary, as a tabloid response. Not just your comments, but the comments by the majority. If someone looks at all the facts of his 37 years' service - lists out his achievements and his failures - and then concludes that he should resign, I have no problem with that. But I do have a problem with a TD or a journalist or a contributor on Askaboutmoney looking to fire someone based on one particular episode.



Brendan

 

[Sunny]

Sunny, as I understand your point you want a fundamental change in society's economic paradigm. The current position is that what you have earned you have earned and what you have sold you have sold. Only in the event of proven fraud can these transactions be unwound. PN had earned his FULL retirement package over 40 years, there was nothing ex gratia in his award and it was not early retirement. You protest your innocence of the witchhunt and yet you demand that PN's TFLS to be the first salvo in the launch of your new economic paradigm.

I do want a fundamental change. I have already said I don't like Neary walking off into the sunset with full entitlements but I have already stated that I accept that it is too late in his case to change things and so he is entitled to what he got. I didn't demand that he lose his TFLS. I said I would like him to to lose it however unrealistic that is. Hardly going to kill him as he will continue to earn over €130,000 a year. Just as I think it is wrong that Sean Fitzpatrick can walk off with a pension of over €500,000 a year despite having a brilliant career as a businessman. Ray Burke is still getting a six figure pension from the taxpayer.

I am not looking for a new economic paradigm. I think senior executives and senior civil servants and politicians should be very well paid. I just want them to accept responsibility some accountability. Look at Patrick Neary. He was a career civil servant. He knew going into the job of Regulator that if anything happened (like it has), he faced no penalty whatsoever. And yet we pay him €260,000 a year.

 

[Bronte]

Is there any situation where a civil servant can commit the gravest of offences and can be docked in pay even if they have given a lifetime of service. In other words is there anything so bad that a person can do that they will have financial penalties or any other type of punishment?

 

[Padraigb]

...The main point I was making was that Irish banks had not bought syndicated sub-prime loans...

I don't know if that point on its own tells us anything about the quality of the regulatory regime or the quality of Irish banks' decision-making. It looks to me as if Irish banks stayed out of that market because they were poring funds into a more convenient pit. I suspect that if we had not had a property bubble then the banks might have bought securitised sub-prime products.

 

[Sunny]

Is there any situation where a civil servant can commit the gravest of offences and can be docked in pay even if they have given a lifetime of service. In other words is there anything so bad that a person can do that they will have financial penalties or any other type of punishment?

1) With effect from 1 January 1994, total forfeiture of superannuation benefits would apply only in cases where civil servants were dismissed, or resigned to pre-empt dismissal, on foot of:

(a) major fraud against the Exchequer;

(b) offences which were gravely injurious to the State; or

(c) other offences liable to lead to a serious loss of confidence in the Civil Service.

Have never heard it happen which is a credit to the majority of people involved in the civil service. I also don't know if in reality it ever would happen.

 

[Sunny]

I would word it differently. The main point I was making was that Irish banks had not bought syndicated sub-prime loans. No one on the Oireachtas committee challenged the assessment of lending as "conservative". Now everyone is saying that the dogs in the street knew that the banks had lent too much to property. In retrospect, this is fine. But the politicians were not saying it.

The regulation of the funds industry is done very well. I have seen nothing to challenge that. I would add that The Credit Union Regulator's attempts to regulate unwilling credit unions has been very appropriate but when a Credit Union goes to the wall, the FR will again get blamed for being too lax with them.



Brendan

Irish banks weren't big into securitised investment products because they didn't need to invest excess liquidity. They just poured it into the property market. As mentioned above, it was more luck than anything.

Brendan, it wasn't the politicians job to challenge the assessment that lending was conservative. It was up to the regulator. Remember the reaction when 100% mortgages were introduced. Concerns were raised and First Active and the Regulator replied that the lending would only be targeted at suitable borrowers. Within weeks, every bank was offering the product, there was advertisements on buses and leaflets being given out every where you looked.

 

[Bronte]

1) With effect from 1 January 1994, total forfeiture of superannuation benefits would apply only in cases where civil servants were dismissed, or resigned to pre-empt dismissal, on foot of:


(b) offences which were gravely injurious to the State;

(.

Would that include if the regulator by not doing his job properly resulted in our banking system collapsing or nearly collapsing do you think? Would the near collapse of the banking system be 'gravely injurious to the State.' It would be hard to think of anything more serious.

 

[Sunny]

Would that include if the regulator by not doing his job properly resulted in our banking system collapsing or nearly collapsing do you think? Would the near collapse of the banking system be 'gravely injurious to the State.' It would be hard to think of anything more serious.

I don't think it even crossed peoples mind. I don't think anyone deserves to lose all their pension entitlements for one mistake throughout a 40 year career but I am not sure why he should be allowed to use the salary that he was paid for the job that he failed to do properly as the base for calculating the pension entitlement. Could his salary that he was on before becoming regulator not be used instead and lose the benefits for the years he was regulator.

Maybe I am completely wrong about all this and we should continue to see people at the top of our public and private sectors accept massive salaries and pensions without facing any consequences for something that happens on their watch. People talk about reckless banks etc but surely having executives who are paid massive sums no matter what happens is just asking for trouble.

Actually I think I will grow a beard!

 

[Complainer]

1) With effect from 1 January 1994, total forfeiture of superannuation benefits would apply only in cases where civil servants were dismissed, or resigned to pre-empt dismissal, on foot of:

(a) major fraud against the Exchequer;

(b) offences which were gravely injurious to the State; or

(c) other offences liable to lead to a serious loss of confidence in the Civil Service.

Have never heard it happen which is a credit to the majority of people involved in the civil service. I also don't know if in reality it ever would happen.

Wasn't there a case recently of a formal postal worker being refused his An Post pension because he had been convicted of robbing a post office?

 

[Superman]

Wasn't there a case recently of a formal postal worker being refused his An Post pension because he had been convicted of robbing a post office?

No I'm fairly certain he was given his pension - which is why the story hit the news.

 

[Complainer]

No I'm fairly certain he was given his pension - which is why the story hit the news.

Nope - he was refused

[broken link removed]

 

[Bronte]

Well what the postman did was very very serious and I suppose the following is less serious and certainly not 'gravely injurious to the State' nor 'likely to lead to a serious loss of confidence in the Civil Service' really a trival few oversights when you think about it.................

1 Allowed banks to give loans to people at many multiples of their salary which were unsustainable and without a real stress test
2. Allowed banks to give 30 and 40 year mortgages
3. AAM says there was overcharging of certain customers but the regulator is not going to force the banks to pay it back
4. Allowing bankers to give developers the money to purchase development at vastly overinflated prices which resulted in number 5
5. Allowed banks and developers to be so cosy that it was in the interest of both to sell property at a premium in order for the developer to repay the cost of number 4 plus making substantial profits for both bank and developer to the detriment of the thousands of people in negative equity
6. Not knowing that certain banks were giving loans to directors that were hidden
7. Allowing directors of banks to borrow from their own bank to invest (gamble) on the banks own shares
8. Not noticing when a certain bank colluded with 'investors' to stop the bank from going under when one individual said he was selling his massive shareholdinging/pulling out
9. Allowing the situation to develop wherein one bank had to be nationalised and two others on the brink
10 Presiding over a banking system wherein the government/taxpayer has to guarantee all deposits of 100K in order to prevent a run on a bank
11. Lettign the situation develop so seriously that recapitalistion of the banks is being funded by the raiding of the national pension fund
12. Currently banks being allowed to give builders/developers loans with no interest while punishing home mortgage defaulters by repossessing their homes and probably chasing them for the interest, interest on interest, fees, costs and charges till death us do part etc

And the arrogance of the bankers goes on unabated and unchecked, they now want the exposure they have in relation to property purchased (point 4) to be taken over by the taxpayer. I don't rembember the banks passing on their profits to the taxpayer.

Yeah all in all poor Pat Neary is a victim and we should feel sorry for him.

Have I forgotton anything, I'm so lost with it all.......... I don't know why there isn't a revolution...........

 

[Joe Hill]

Bronte
Your rant is unfair to Pat Neary, and perhaps more damming, shows that you really have very little idea aout the roe and powers of the regulator. An hour or so on the regulator's website can be very rewarding! Taking your points one-by-one:

1 Allowed banks to give loans to people at many multiples of their salary which were unsustainable and without a real stress test
I know of no power that would enable the regulator to set conditions upon which banks may extend credit. Like all public bodies the regulator can only perform those actions and functions that are permitted by legislation. If you can find the relevant power please share it with AAM.

2. Allowed banks to give 30 and 40 year mortgages
See answer to 1 above.

3. AAM says there was overcharging of certain customers but the regulator is not going to force the banks to pay it back
The issues with regard to overcharging by banks occurred prior to 2005 (i.e. the date on which the regulator received its powers). Nevertheless the regulator recovered €167 million for consumers. All of this information is on their website for anyone who is interested.

4. Allowing bankers to give developers the money to purchase development at vastly overinflated prices which resulted in number 5
See answer to 1 above.

5. Allowed banks and developers to be so cosy that it was in the interest of both to sell property at a premium in order for the developer to repay the cost of number 4 plus making substantial profits for both bank and developer to the detriment of the thousands of people in negative equity.
This point is unanswerable, it’s just a rant.

6. Not knowing that certain banks were giving loans to directors that were hidden
I think it is fair to say that this was the responsibility of the internal and external auditors, not the regulator. The regulator does not audit banks.

7. Allowing directors of banks to borrow from their own bank to invest (gamble) on the banks own shares
See answer to 1 above. Subject only to company law requirements directors of banks are free to borrow from those banks.

The following statement appeared on the regulator's website on 5 February:
The Financial Regulator proposes to impose a requirement on credit institutions to disclose in their annual accounts, on an individual director basis:
· Details of the maximum amount of loans from that credit institution outstanding at any time during the year to that director (including connected loans)
· The year-end balance of borrowing by that director (including connected loans)
It is intended that this requirement will become effective from 1 March 2009.

While this might sound suspiciously like a barn door being bolted,perhaps more interesing is that they are only putting a reporting requirement in place because they don't have the power to prohibit the practice.

8. Not noticing when a certain bank colluded with 'investors' to stop the bank from going under when one individual said he was selling his massive shareholding/pulling out
Nobody knows what the real story here is at this time – or at least neither you nor I do. It would seem invidious therefore to draw any conclusions.

9. Allowing the situation to develop wherein one bank had to be nationalised and two others on the brink
You may have noticed that the world banking system is in crisis triggered, though not caused by the collapse of Lehman and the liquidity crisis that has followed. Virtually every government has underwritten their entire banking sector. The only signifcant difference is that in Ireland the regulator stepped down. I’ve not seen a report of any other regulator that has accepted that whoever is on the bridge is responsible.

10 Presiding over a banking system wherein the government/taxpayer has to guarantee all deposits of 100K in order to prevent a run on a bank
See answer at 9 above

11. Letting the situation develop so seriously that recapitalistion of the banks is being funded by the raiding of the national pension fund
The manner in which the recapitalisation is funded is entirely a matter for the Government and not the regulator.

12. Currently banks being allowed to give builders/developers loans with no interest while punishing home mortgage defaulters by repossessing their homes and probably chasing them for the interest, interest on interest, fees, costs and charges till death us do part etc
Regarding the rolling up of interest please see answer at 1 above. The Consumer Director of the regulator has addressed the issue of repossessions, see here

And the arrogance of the bankers goes on unabated and unchecked, they now want the exposure they have in relation to property purchased (point 4) to be taken over by the taxpayer. I don't remember the banks passing on their profits to the taxpayer.
Banking is the second oldest profession in the world, sharing much of the moral equivalence of the oldest, but being far less pleasant to deal with. Bankers are arrogant and self-important, and I imagine that in a few years they’ll be preaching to us all again – it was ever thus.

Yeah all in all poor Pat Neary is a victim and we should feel sorry for him.
Pat Neary is not a victim – and he has never sought to portray himself as such. His retirement announcement (here ) supports the view expressed by Brendan and others that he is a competent man who chose the honourable course of action.

Have I forgotten anything,
I don’t know

I'm so lost with it all..........
True

I don't know why there isn't a revolution...........
Me too!

 

[Complainer]

1 Allowed banks to give loans to people at many multiples of their salary which were unsustainable and without a real stress test
I know of no power that would enable the regulator to set conditions upon which banks may extend credit. Like all public bodies the regulator can only perform those actions and functions that are permitted by legislation. If you can find the relevant power please share it with AAM.

2. Allowed banks to give 30 and 40 year mortgages
See answer to 1 above.

4. Allowing bankers to give developers the money to purchase development at vastly overinflated prices which resulted in number 5
See answer to 1 above.

As I public servant, I know only too well the difficulties of operating in a tight legislative environment. However, if the Regulator felt that he didn't have sufficient powers to prevent the crash, he should have been hammering this point home to the Dept Finance at every opportunity.

There have been a few public bodies that had the cojones to take this approach, notably the Ombudsman, the Ombusdman for Children (neither of which are controlled by politically appointed boards) and the Equality Authority (and look where it got them).

It is not enough for the Regulator to say he didn't have sufficient powers.

 

[Joe Hill]

However, if the Regulator felt that he didn't have sufficient powers to prevent the crash, he should have been hammering this point home to the Dept Finance at every opportunity.

This is, on the face of it, a fair comment. However at the end of the day the powers of the regulator were set by the Department of Finance and their political masters, and I think we all instintively know that anyone who would have sought to limit the expansion of banks and developers in the Ireland of the "Galway tent" (not to mention all that lovely tax revenue) would have been about as welcome as a fart in a lift!

 

[Purple]

As I public servant, I know only too well the difficulties of operating in a tight legislative environment. However, if the Regulator felt that he didn't have sufficient powers to prevent the crash, he should have been hammering this point home to the Dept Finance at every opportunity.

There have been a few public bodies that had the cojones to take this approach, notably the Ombudsman, the Ombusdman for Children (neither of which are controlled by politically appointed boards) and the Equality Authority (and look where it got them).

It is not enough for the Regulator to say he didn't have sufficient powers.

I agree again! (That's the second time today!)

 

[Complainer]

I think we all instintively know that anyone who would have sought to limit the expansion of banks and developers in the Ireland of the "Galway tent" (not to mention all that lovely tax revenue) would have been about as welcome as a fart in a lift!

True, but I'd expect people at that level to be more worried about doing their job than about being welcome.

 

[capall]

Its the same story around the world with regulation

In alot of instances the laws in force should have allowed for better regulation,it didnt ,the main reason seems to be that the political will wasnt there to regulate. The regulation offices were staffed with people who didnt rock the boat as it was not in the best interest of anyones career to do this.