Sign in. It’s quick, free and it’s up to you.
An account is an optional way to support the work we do. Find out more.
Updated 5.20pm
A FORMER ADVISOR TO the late finance minister Brian Lenihan has told the banking inquiry that the “lethal expansion” of the Irish property market could have been avoided had there been intervention in 2004.
NUIG Professor Alan Ahearne, who worked for Lenihan between 2009 and 2011, told the Oireachtas committee that 2004 would have been “the best time to get in there” and avoid the subsequent increase in property prices beween 2004 and 2006 which was “particularly damaging”.
Ahearne has been described “the economist who told you so” and is considered to have been one of the few contrarian voices during the economic boom who warned of the dangers of the bubble.
The academic said that he had heard anecdotally that the property market had stalled in mid-2006 when houses weren’t being sold. But at various points during his evidence today he spoke of the lack of will across all sectors to intervene.
“This was extremely popular and there was lots of people getting money from this,” he told the committee set up to investigate the causes of the banking collapse that led to the 2008 bank guarantee.
Ahearne said that the boom “was great, it felt great at the time” and so “people didn’t want to hear that something was wrong”. He said:
Booms are very popular when they’re happening, the amount of money coming into people’s pockets is fantastic.
He was later asked by the Socialist TD if what he was saying was essentially echoing Lenihan’s infamous “we all partied” comments in 2010.
Ahearne, who was working for Lenihan at the time the comments were made, insisted: “I didn’t mention anything about partying… the result of these booms and bust are devastating on people.”
He said that Ireland’s property boom and bust was one of the biggest in history and certainly in the top three alongside Netherlands and Japan.
Ahearne highlighted 100 per cent mortgages being given out by banks during the boom as having been “extremely dangerous instruments”.
He said that at the time the financial regulator did not lack the tools to intervene saying it could have increasing loan-to-value ratio and have been more intrusive with banks.
But, he said, the regulator “put a lot of trust in senior management with the bank” and said that the “the implementation of regulation failed dismally”.
Of the political climate at the time, Ahearne said that in the run up to general election in 2007 no political parties were recommending the policies that would have stopped the bubble.
He said that if any party had written down policies that would have prevented the boom, such as tax increases, they would not have got elected.
Questioned by Sinn Féin TD Pearse Doherty, he later clarified that he was referring specifically to the three main parties at the time, Fianna Fáil, Fine Gael and Labour. Of their manifestos, he said:
“If you took the covers away, it was difficult to tell which party was which.”
On the bank guarantee itself, Ahearne was asked by Fine Gael senator Michael D’Arcy if he thought it was a good idea at the time.
The academic responded: “I didn’t know, I was sitting in an office in Galway.”
Alan Ahearne said later he was puzzled as to why the guarantee included subordinated debt i.e. not burning junior bondholders. He said: “I’m sure there was a reason, I couldn’t think of one.”
Media scrutiny
Separately, the banking inquiry is to hear evidence from current and former newspaper editors as well the former head of news at RTÉ, Ed Mulhall, later this month as part of its examination of the media’s role in the crash.
Inquiry chairman Ciarán Lynch said this evening that the hearings would focus “on the role of the media during the property boom in the lead-in to the banking crisis and any changes in approach after the crisis”.
To embed this post, copy the code below on your site
How do you tell the ethnicity of a puppet? Why did it take a year? So many questions
@Disco Inferno: it’s name I suppose, also just look at the furore about Big bird from Ted cruz
What ethnicity are Ernie and Bert?
@Edmund Spencer: more importantly who calls Bert and Ernie, Ernie and Bert. Also ethnicity is pretty obvious when they combine to form Bernie Sanders
@Darren Byrne: they’ve always been Ernie and Bert to me, this is the hill I am prepared to die on.
@mayo chicken: It will happen quickly, we’ll just bury you under all the officially licensed packaging that says “Bert & Ernie”.
@Darren Byrne: write it on my tombstone!
The best thing about this is that for the average person, it won’t bother them – but for the real right-wingers, they’ll be screaming bloody murder over it and it will be hilarious.
@Seán Ó Briain: Exactly.
Is she from north or south Korea I wonder?
@Ronan Walsh: she’s from America
Brilliant news. Great to see such an influential TV show giving these issues so much thought, giving kids the chance to learn what previous generations have not been exposed to often enough.
@Freudian Quip: what nonsense. Sesame Street has been a paragon of equality and diversity for over half a century.
Oh to be ji-young again .,
I hope Naomi will be actually able to take part in the show.
have your say