Brian Cowen's only sense of regret about overseeing the blowing and then bursting of a bubble is that he didn't have the benefit of hindsight.
Brian Cowen is sorry for your trouble. Definitely, maybe. For those who like to consider the Oireachtas banking inquiry as a forum to perform acts of contrition, the former taoiseach duly obliged.
“I’m sorry that the policies we felt necessary to put in place in responding to the national crisis brought with it hardship and distress to many people,” he said.
There were a few other expressions of regret in his opening remarks, but pretty soon it became obvious that the apology was qualified. He’s sorry that it was necessary to bail out the banks, but he doesn’t feel he has much to apologise for in his stewardship of the economy as minister for finance.
Yesterday was given over to parsing Cowen’s tenure in that role. Next week he will return to be questioned on his performance and decisions as taoiseach. What was most revealing yesterday was that he gave the impression of having few regrets about decisions, certainly prior to the general election of 2007.
There has long been a feeling abroad that as taoiseach, Cowen was haunted by the knowledge that had he acted differently when he was in the finance portfolio, the crash may not have been as loud or violent. Yesterday suggests otherwise.
He was robust, animated, and here and there he forgot momentarily that he was giving evidence to a committee rather than sparring across the floor of the House during Leaders’ Questions.
His only sense of regret about overseeing the blowing and then bursting of a bubble is that he didn’t have the benefit of hindsight at the time. From this vantage, picking through the rubble, he can see that if he knew then what he knows now, he may well have done things differently.
“I’m here to give my contemporary thinking,” he told Kieran O’Donnell, “not the benefit of hindsight.” In hindsight, he can now see that tax incentives for various construction schemes could have been terminated earlier, but he doesn’t see it as a major thing.
“There was no government in the democratic world which was budgeting at the time on the basis that we were going to have the biggest financial crisis in 2008.” And on it went, not so much excuse as explanation. While he wasn’t going to wear sackcloth and ashes for the day, he was willing to throw his hands up now and again in deference to wisdom after the event.
His narrative was similar to that laid out by Charlie McCreevy the previous day. Times were good, budgets were in surplus, everybody had a taste of more in their mouths. Absolutely nobody was advocating for a calming of the horses.
As far as the banks were concerned, it was all to do with the financial regulator. He was constantly being told there would be a soft landing. He didn’t know how bad things had got.
When Joe Higgins related to him a speech he made advocating for investment from financial services companies, he rejected a suggestion that he was doing the bidding of anybody.
“You’re setting me up as a sort of guy who’s promoting cowboys,” the witness said. At all times, he said, the public interest was what he worked for.
He was asked about the infamous Galway tent, where developers were wined and dined.
“I’ve read about that,” he said “Contracts being signed and that. If they were why would we bring the media in to sit down. It’s nonsense.”
One theme that he kept revisiting was that the country hadn’t long been at the top table of the nations of the world and required corresponding infrastructure, physical and social. This, he asserted, accounted for a large segment of the generous public spending during his time at finance.
“I was very much of the view that to build on the gains, we had to play catch-up,” he said.
“For the first time in the history of the State we had a rising population, there had been historic under investment and there was no doubt in my mind there was a need to ensure that the benefits of prosperity were spread around.”
It was an interesting defence of spending that was way ahead of inflation, and largely dependent on the boom getting boomier. To that end it’s another factor to throw into the mix along with the advent of the euro, cheap cedit and loss of control over interest rates which all contributed to the demented environment of the time.
While he didn’t look back in arrogance like McCreevy, he has retained the political instincts of a thorough bred partyman. McCreevy had no problem admitting that purse strings were loosened in the run-up to general elections, but when Cowen was invited to explain pumped up spending in a pre-election period he was not as forthcoming.
The second session concentrated on Cowen’s time in Finance after the 2007 general election.
Maybe it was the afternoon lull, but the witness appeared a relatively shrunken figure here, no longer squaring up to defend his record.
He was asked about the dinner he had with Anglo board members in April 2008, and about a call he took from Sean Fitzpatrick when he was abroad on the Paddy’s day jaunt a month earlier. Fitz was concerned about a huge fall in the bank’s share price and the emergence of Sean Quinn as a major, and potentially disastrous shareholder.
Cowen referred him to “the authorities”.
This is a period during which the apparatus of the State should have been put on high alert.
The previous September the British institution Northern Rock had gone to the wall. Chill winds of sub-prime rates were blowing across the Atlantic. The miracle shine was coming off Anglo Irish Bank, exposing it as a casino. Yet, there appears to have been precious little urgency in the Department of Finance.
Chairman Ciaran Lynch probed again about the now infamous theory of a “soft landing” that persisted through early 2008.
“Forecasting is not an exact science and maybe we all got fixated on it,” Cowen said.
Overall, yesterday’s performance owed more to the old pugilistic Cowen, rather than the broken figure who left the national stage four and a half years ago. He has a few regrets from his time as minister for finance, but not that many.
In the fullness of time his reflections on the general climate and ancillary matters while he was minister for finance may go to a favourable reassessment of his tenure. For now though, it’s unlikely that his testimony has changed many minds that have long been made up about his role in these matters.
Michael Clifford
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