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I found that you mentioned his report in June: The Irish Disease
The Irish crash was a peculiarly Irish creation after all.
Oh, well, nothing particularly Irish about that, Iceland had the same problems... And so did bigger countries, it's just that bigger countries are TBTF...
Reports blame domestic factors for banking crisis
...

The Government's budgets during the boom years "contributed significantly to the economic overheating", Dr Honohan said, as they relied to an "unsustainable extent" on the construction sector and encouraged the property boom through tax breaks.

"This helped create a climate of public opinion which was led to believe that the party could last forever," he said.

Dr Honohan found that the Financial Regulator was "excessively deferential and accommodating" to the banks, while the Central Bank, led by his predecessor John Hurley, had not been alert to warnings signs of an imminent crash.

There was insufficient awareness or willingness to accept "how close the system was to the edge" and that it was the responsibility of the Central Bank and the regulator to pull it back from the edge, he said.

"Rocking the boat and swimming against the tide of public opinion would have required a particularly strong sense of the independent role of a central bank in being prepared to `spoil the party' and withstand possible strong adverse public reaction," Dr Honohan said.

Pat Neary, the former chief executive of the regulator, said he had no comment. Mr Neary's predecessor, Liam O'Reilly, and Mr Hurley could not be reached for comment.

Dr Honohan said there was "a comprehensive failure of bank management" to maintain "safe and sound banking practices".

The weakness of the Irish banks was not caused by the collapse of US bank Lehman Brothers in September 2008 but by an over-exposure to property driven by excessive overseas borrowing "to support a creditfuelled property market and construction frenzy".

Anglo Irish Bank and Irish Nationwide Building Society were "well on the road towards insolvency" at that stage, he said, while the two biggest banks, Allied Irish Banks and Bank of Ireland, could only have survived without a State bailout if the international financial markets had calmed.

The scale of the Government guarantee raised the cost of the bailout to the State, narrowing options available to fix failing institutions, he said.

...

So obviously the Government will now resign in the wake of such a damning indictment?

I take it that they didn't...

Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010
by Migeru (migeru at eurotrib dot com) on Fri Dec 3rd, 2010 at 08:54:23 AM EST
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