Fianna Fail, A Threat To Democracy?

January 17, 2010

There is so much secrecy around the economic collapse of our banking system that it threatens the very foundation upon which our democracy is built. From the beginning of our banking crisis our electorate has been systematically disenfranchised through the witholding of  crucial information from the  media and the public in general.

Without a referendum on the issue our government  embarked on a solo run to deal with the banks, in favour of bankers and developers and at the expense of taxpayers. Billions of taxpayers money have been handed over to insolvent zombie banks with their former management still intact. Our weak response to our banking crisis with  NAMA (Not Another Mess Again) surrounds bankers and developers with a veil of secrecy to hide away nefariousness doings from the prying eyes of the electorate.

It’s now announced, after a great amount of public pressure, that an Inquiry into our banking financial crisis is about to take place. But its to be held behind closed doors! With secrecy to rival dictatorship censoring and propaganda machines across the world. Misinformation, disinformation, insiders who don’t want outsiders to know what went on on the inside!

According to  Daniel McConnell of Sunday Independent, Jan 17, “Ireland’s national debt is set to double to €150bn”…”one-fifth of all taxes raised will have to go just to pay off interest on the debt mountain”…”between now and 2014, over €32 bn in taxes will be spent merely on serving the interest on the country’s borrowings….It must also be realised that these figures represent the best-possible-case scenario, given the unreliability of Department of Finance forecasting in recent times”. “next December’s Budget will once again have to look at further reductions in government spending.”

Billions are being poured into the black hole created by the banks. Last year €4bn of taxpayers money was poured into the delinquent and zombie Anglo Irish Bank which will be lost forever by taxpayers.”

The banking crisis is costing taxpayers a great deal, so what type of inquiry is likely to be set up in Ireland ?

Lets look at some precedents abroad.

By JIM KUHNHENN, Associated Press Writer – Fri Jan 8, 6:25 am ET

WASHINGTON – Two blocks from the Treasury, where the government not long ago scrambled to save a collapsing financial system, a team of investigators armed with subpoena powers is preparing the official narrative of the crisis and what went wrong.

As Washington focuses on Congress’ regulatory response to the 2008Wall Street meltdown, the Financial Crisis Inquiry Commission that Congress created last spring has been an afterthought.

Until now.

On Wednesday and Thursday, the commission will hold its first public hearings featuring a gallery of the nation’s top bank executives — Lloyd Blankfein of Goldman Sachs, Jamie Dimon of JPMorgan Chase, John Mack of Morgan Stanley and Brian Moynihan of Bank of America.

Angelides is the Democratic former California treasurer. His vice chairman is Republican Bill Thomas, a former congressman who chaired the House Ways and Means Committee. Together they lead a 10-member bipartisan commission with an ambitious mandate and limited time.

They were interviewed jointly Thursday in a small, spare conference room in an eighth-floor office suite onPennsylvania Avenue within sight of the White House and the Treasury building.

Despite their different party labels, both men say that because they aim to explain the crises — not issue recommendations on how to avoid the next one — their work should be fairly nonpartisan.

Still, Angelides and Thomas said the commission could also offer proposed remedies or alternatives if there is strong consensus about the causes of the crisis.

The two men shrugged off decisions by President Barack Obama and congressional Democrats to proceed with a regulatory overhaul before the commission’s work is done. They said the commission’s final findings could still inform future legislation and could be a resource for regulators and for the industry itself.

Thomas in particular displayed impatience with bankers who worry that some additional government scrutiny and transparency will impair the industry.

“We came close to the worst thing in the world,” Thomas said. “So whenever you hear from these people, ‘Well, this will make us not to do this and not to do that,’ I immediately flip it from negative to positive and say, ‘Yeah, and so?'”

Both agreed that the crisis was the result of failures by individuals specifically and by the banking system in general. But in featuring the bankers at its first public hearings, the commission is sending a clear message that the first part of the narrative starts with the chief executives.

The commission is modeled on the 9/11 panel that examined the causes of the Sept. 11, 2001, terrorist attacks. But its prototype could be the so-called Pecora Commission, the Senate committee that investigatedWall Street abuses in 1933-34. It was named after Ferdinand Pecora, the committee’s chief lawyer.

On this point, Thomas and Angelides part ways.

“Nobody remembers the Pecora Commission,” Thomas protested. “The press created the knowledge of the Pecora Commission. C’mon, it’s mostly not applicable.”

“Here’s where I think it is,” Angelides countered. “It is different than the 1930s, but I do think there is a raw hunger for people to know.”

Congress instructed the new commission to explore 22 issues, ranging from the effect of monetary policy on terms of credit and government fiscal imbalances to bank compensation structures.

Thomas said the commission’s inquiry should include a look at the consequences of the 1999 repeal of the Depression-era Glass-Steagall Act that forced the separation of commercial and investment banks. Without the act, banks were unrestrained, Thomas said.

“It was wide open country, which I think is part of the problem in terms of not having a mental, financial, almost moral, obligation anymore because there is no backstop,” he said.

And while Angelides said the commission’s job was not to redebate the merits of the $700 billion bank bailout, he also said the commission’s inquiry does not end at the height of the crisis in fall 2008.

“We start with the belief that the financial crisis is not a past-tense phenomenon,” he said.”

So what type of inquiry does the Irish government have in mind. According to article in Sunday Independent by Daniel McConnell and Jerome Reilly, Mr O Dea, Defence Minister “said it was vital to set up proper terms of reference for the inquiry so that it will “hit the ground running””

Well, this blog has previously supported terms of reference, an agreed questionnaire, or a template such as the 22 issues above.

“The Sunday Independent understands that the preferred option for the inquiry – subject to cabinet approval – is that it would follow the same lines as the clerical sex abuse inquiry which led to the oublication of the Murphy report.

In that case there was a report by Judge George Birmingham which set out the terms of reference which were followed by Judge Yvonne Murphy. It is expected that an expert, or experts, possibly from overseas, would be brought in to study the documentary evidence relating to the activities of the major Irish banks in the lead-up to the nationalising of Anglo Irish Bank and the recapitalisation of the other major Irish banks.

This would be followed by some sort of commission which would have full powers to carry out hearings in private. But, according to sources, its final report would be published. The  object would be to find out what went wrong and to rectify it with all necessary legislation.”

Later blogs I’ll return to a more detailed look at this, particularly from the point of view of proposals put forward by both Fine Gael and Labour. Firstly, a couple of preliminary comments on  this Fianna Fail proposal.

The Fianna Fail proposal has a number of faultlines. Mismanagement of our economy and its regulatory sector is a charge levelled at Fianna Fail. So for FF to decide the makeup and terms of an inquiry into our banking collapse is akin to asking the foxes to inquire into the carnage inside the chicken pen! Notice above in the USA, it is a bipartisan committee that is looking into the banking crisis. In Ireland, a representative proportional representation from all political parties should inform the setup of a commission. This would protect the interests of the taxpayer.

Such a cross party representative group should act as a jury to oversee and agree both the terms of reference and the makeup of a team of dedicated experts to inquire into the banking collapse along the lines of the Murphy commission.

The inquiry should not be a public inquiry. The reason I believe that this should be the case is that a public inquiry would give foreknowledge of questions and answers to witnesses, who could use this information to groom their answers.

The inquiry should have powers to compel witnesses to give evidence and tell the truth and punish those who do not.

The inquiry should be fully documented and scrutinised with cross referencing of various witness evidence to ensure compliance with the truth.

To protect the interests of the taxpayer and that the open nature of the inquiry be maximised with its benefit for future legislation and action maximised, all proceedings, inquiries, witness testimonies, should be recorded in both video archives and taken down as documentary evidence and made available to the public for future public scrutiny as part of the final report.

Witnesses should not be allowed withhold evidence on the basis of  ‘right to remain silent’ , non compliance with the inquiry should have strong and appropriate sanction, ‘right to remain silent’ should be sanctioned and considered as withholding of evidence with strong jail terms if required.

A deadline should be set for the running of the inquiry over a fixed period.

more to follow….


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