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THE BANKING INQUIRY has been widely viewed as a pretty mundane affair so far with experts telling the Oireachtas committee much of what we already know about the crisis.
While the hearings have been informative and somewhat illuminating, particularly when Central Bank governor Patrick Honohan was before the committee last month, many members have privately admitted it hasn’t been very exciting.
However, the inquiry will today hear from Professor William ‘Bill’ Black of the University of Missouri-Kansas City. Black is widely-respected expert in banking fraud who recently helped the World Bank develop a series of anti-corruption initiatives.
He will be talking about banking policy, systems and practices before TDs and Senators and his central thesis is that the leading cause of catastrophic bank failures has long been senior insider fraud.
Inquiry sources said that they expected his evidence to be “colourful”. Legal advisors expressed concern at a private session yesterday that Black could stray beyond the inquiry’s legal remit in his evidence today.
Here is Black testifying before a US congressional hearing into the collapse of Lehman Brothers in April 2010:
Black has argued that the large salaries paid to some senior bankers results in the encouragement of fraud and has written extensively on the “perverse effects of compensation” in the banking sector.
Black has previously been harshly critical of Finnish banking expert Peter Nyberg’s report into the Irish crisis, arguing that his report had ignored alleged accounting control fraud in the Irish banking sector.
Nyberg, who appeared before the committee last December, said in his 2011 report that the willingness of banks to issue high-value loans for risky commercial property was a fundamental cause of the banking crash. He said the bank guarantee was issued on the belief that the Irish banks were solvent, when in fact they were not.
During a private meeting of the banking inquiry yesterday concerns were raised by legal advisers as to what can be expected from Black’s evidence to the committee.
It’s understood he submitted a lengthy, 75-page document to the inquiry for its consideration, but his official evidence will be confined to his opening statement.
Also appearing before the inquiry today will be Mario Nava from the European Commission who will given evidence on banking regulation and supervision with the EU’s regulation in the run-up to the financial crisis likely to be discussed.
Separately, the inquiry said yesterday evening that the Central Bank governor Patrick Honohan would be assisting it in seeking cooperation from the European Central Bank.
Committee chairman Ciarán Lynch said: “Governor Honohan has agreed to open dialogue with the ECB to assist the Committee. The Committee has agreed to proceed with this line of engagement to explore and develop how the ECB can co-operate with the Inquiry and assist the Committee in advancing its work.”
First published 04 February 2015
A sample of 20 properties out of 48,000 can hardly be considered representative of the total, that is only 0.04%. To have a 95% confidence level, normal in statistics, the sample size should be over 100 times greater, about 2,000 properties.
@D. Memery: Sure that would likely cost billions just to complete the surveys!
@Chris Linehan: not sure it would be billions, but not cheap either, which in of itself highlights just how big the issue is. However, that still doesn’t diminish the fact that the report lacks any statistical foundation from which to draw valid empirical conclusions from such a small sample size compared to what is required.
Every town and village in the country has derelict /vacant properties.. they may not be derilict , but it’s a shame to see them empty.. I would love to see the properties chosen for this survey.
@Daniel Morrissey: it is a shame – but many are in the wrong place to assist with the homeless housing list despite the fact that many small villages could do with an injection of residents
@Daniel Morrissey: Many of which should be razed to the ground and a building with a suitable layout put back in it’s place. The trouble is, these properties are an expensive site so buyers are not interested – and often the owners don’t have the funds to carry out the work. Renovating them doesn’t appeal either because the costs are as much as the aforementioned replace and build. Then add in the stringent planning laws and people just say it’s not worth it. It’s a vicious circle.
Sure derelict buildings are costly to repair, but where and what type of ones. The ones with 50 acre land close to Dublin that nobody can buy bar the crony friend in government / council member / builder… who will get 100.000 free renovation ticket?
I can smell the trickery being cook!
Cpo them , put them up for auction and let the market decide , anyone not developing them within 3 years forfeits the property and what they paid back to the state
Of course a property that is not suitable for living in is exempt from LPT – local property tax – so the idea of paying someone to repair a property sounds great on paper but suddenly this property becomes liable to a tax that did not apply before. One would also be well advised to insure the property. There are ongoing maintenance charges Also, if one rents the property after renovation, one is faced with more taxes and responsibility and also the prospect of not being able to sell the property because of sitting tenants. Why not lease them to the local authority who then become responsible for repair and maintenance and all charges etc. not to mention being able to give homes to people on the housing list
@Niall Ó Cofaigh: I see where are you coming from Niall, do you think that if somebody has building connections or even a company, they could take the 50.000 or 100.000 free to renovate the house nicely, sell it to or even better rent it to the local authority that as you said “have people in the housing list” for a nice price, and pocket the money over and over and over… one house at a time or 50.
Another advantage will be that renovating cost less most times than building from scratch but you can sell it for the same market value pretty much. Better margin! Sounds like a great business to me.
Buildings not suitable for renovation should be forfeited to the state at site value. That might make the owners renovate them on time.
@Tom O’Hanlon: Unfair on owners who just don’t have the funds to renovate.
Total lies, fantastic Herbert Sims buildings lying idle in Ballybough under the shadow of Croke Park and have been for years not sure how many families they could house.
have your say