POWER AND MONEY corrupts. If you needed any reminder, each and every time you read a news story about a bank, there is ample evidence.

The Mahon Tribunal has  shown that it is not only restricted to the walls of the big banks. (Though, when times were good, the number being paid for political influence was far greater than those just with influence in the corridors of finance.)

Is anybody surprised? I doubt it. We all saw it happening and turned a blind eye. I moved to Ireland at the beginning of 2003, not the pinnacle of the excess but the property boom was certainly motoring along. Every Thursday, Friday and Saturday there would be a black-tie ball in the Radisson Hotel in Galway. The must-have attendee for any charity was the long list of developers and bankers, the more the merrier and if you could land a politician or two, the developers and bankers were guaranteed to attend.

I remember a car worth €15,000 being bought for €75,000, in a charity bidding war between developers

You could count on the developers entering a bidding frenzy for the most meaningless piece of tat and you were sure to make a lot of money. I remember one notable occasion someone bidding €75,000 for a car worth €15,000, just to show that they could but more importantly to win the bidding war against the other developers.

The Mahon Tribunal tells us nothing new. In those days wherever you bumped into a developer, the banker and politician weren’t too far behind. There are many instances of them setting up companies together to profit from the influence that they could all bring to bear. It would be wrong to tar everyone with the same brush just as every banker isn’t bad but you’d regularly see the three huddled together at racecourses discussing the latest horse that they had bought and parading in front of the stands with their latest winner. So the Mahon Tribunal tells us nothing new; it just confirms what we had already seen for ourselves.

When a full report is written about the financial collapse in Ireland, the bankers and politicians will stand side by side in shouldering the blame. When charges are brought – sorry that should read if charges are brought – the bankers and politicians should stand side by side. But maybe that is why there haven’t been any charges. The murky world  of politics and banking were hand-in-glove during that period and the list of guilty parties would be numerous and quite illuminating.

Banking survives on confidence. If you think the bank is likely to go out of business, you would not deposit your money. If the elected government of a certain time were likely to prove corrupt and seek bribes for the slightest favour, you wouldn’t elect them. But both happened and we allowed it to occur, by allowing the banks to run out of control with our money and electing a government with a frightening lack of moral fibre and complete incompetence when it came to keeping the banks under control.

The financial woes that we are suffering in Ireland are not because of the investment arms of the banks. It’s not because someone was trying to speculate aggressively in some new exotic market. It is clearly as a failure within their bread and butter business; lending.

Banks have lent money for hundreds of years, it’s quite a simple business: You lend a multiple of your asset base. It is understood that there will be a minor level of default but the level of default is many times underwritten by the amount that  you charge for the service.  The math is very simple; most junior school children could complete it successfully. It is checked daily within the banks and reports are sent to the regulator and the Central Bank who look at the numbers from a slightly more macro perspective but the computations do not increase in complexity. When you start to approach the upper limits, lending is pared back because it becomes slightly more dangerous.

I asked a friend where he thought the over-ride switch was flicked. “The Galway Tent”, he said.

During the last financial crisis, which is now only very slowly improving, somebody somewhere hit the over-ride button. Not once but they kept the finger on the button for years and years. Rest assured the banks were initiating reports that detailed their lending portfolio; rest assured that these same reports were sent to the regulator and the Central Bank for their own perusal. As limits were breached, as they undoubtedly were, somebody said it was okay.

That somebody wasn’t a regulator or a central banker – they simply would not have had the authority to do so. I asked a good friend a couple of weeks ago where they thought the over-ride switch was flicked. The answer was, “The Galway Tent”. They are probably right. As bankers, politicians and developers slapped themselves on the back at the Galway races and congratulated themselves on the excesses of the previous twelve months, somebody flicked the switch and said: ‘It’ll be grand’.

Accountability for the crisis is still a long way off and I still remain sceptical that there is any real desire to bring the right people to trial. I have long believed that this is because of the shadow that is cast across many politicians from this period. In Iceland the premier faces charges of incompetence and negligence in a courtroom. In Ireland, nothing.