The assertion by the Minister for Finance that the publication of the
Anglo Report “concludes a regrettable chapter in the history of Anglo
Irish Bank” suggests that the Minister is still in denial about the
total failure of governance, regulation and supervision of the third
largest bank in the country.

He’s talking about closing a chapter, but in reality, we haven’t even
opened the book.

Soft-touch regulation and a culture of golden circleS laid this bank low
and landed responsibility for the subsequent mess in the taxpayers lap.

Taxpayers will be outraged by the disclosures that not only is there a
write-off of €300m in the case of the ‘Mysterious 10’, but that a
further total of €179m is owed by the directors for their loans at 30
September 2008. While we know about the loans of €83m to Mr Fitzpatrick
we’re told nothing about which directors owed a further €96m at the year
end.

It would appear from the notes to the accounts, that at least some of
the directors loans related to share purchases in the company as both
the chairman’s statement and note 51 suggest that some of these loans
were secured on the ordinary shares of the company.

The bottom line is that Ireland will pay more for its debt as a result
of this mal-practice.

The report sheds some light, but frankly, not enough light on the
culture of playing hard and fast with the rules and regulations that has
been allowed to fester in Anglo Irish Bank in particular, and in our
financial services sector in general.

It would seem that the provision for bad debt is particularly
optimistic! The provision for impaired debts has gone up dramatically
year on year from €335m in 2007 to €957 in 2008. That is a very
substantial figure, but it is dwarfed by the €1.7b that is debt at-risk,
or ‘past due but not impaired’. Precisely what our exposure to that will
be, is not clear.

We did get some information on the matter of dated subordinated debt.
Labour raised a red flag on this shortly after the bank Guarantee scheme
came into being, and it looks like our concerns were well placed.
According to the report, Sean Fitzpatrick himself purchased €6.3m of
dated subordinated debt, at a time when he must have known that the
survival of the bank was in question. The question now must be asked at
to whether in the light of the Bank Guarantee Scheme, the taxpayer will
now be exposed to this debt, and indeed the other €700m such debt issued
in 2008.

“Dated ‘Subordinated’ bank debt are bonds issued by banks which are
subordinate to (i.e. rank after) other debts which the bank owes, should
the bank fall into receivership or be closed, and in this case, such
debt was specifically guaranteed by the Govt under the Bank Guarantee
Scheme.

If confidence is to be restored in our banking system it is now critical
that a High Court inspector be appointed to the get to the bottom of the
matter.

The govt still has serious questions to answer as to how and why the
culture of playing hard and fast with the rules and regulation and
downright disregard for the rules and regulation came into being and was
allowed to flourish.

Labour believes that as part of the process of regime change, the
Government should appoint an Irish Banking Commission. This would be an
independent body, composed of people of the highest international
reputation and competence, with a mixture of Irish and non-Irish
Commission members.

The Commission’s functions would include the approval of appointments to
the Boards of Irish Banks, the approval of the appointment of senior
executives, the vetting and monitoring of both business plans and the
overall debt situation.

The Commission could also oversee the setting of Board Remuneration and
executive pay. Such a body would lend credibility to the changes that
are needed for Irish banks. It would be time-limited in duration,
pending reform of the role of the Financial Regulator and the Central
Bank.