# Financial Regulator's Consumer Panel slams Financial Regulator



## canicemcavoy (21 Dec 2009)

Presumably this will be covered too:

[broken link removed]



> THE FINANCIAL REGULATOR has failed in its job of protecting consumers by providing a safe and fair market, according to a damning assessment by a Government-appointed watchdog.
> 
> “We believe it is unacceptable that the board of the Financial Regulator has failed to take responsibility for their stewardship of the organisation during the last six years. This failure undermines their ability to enhance or enforce corporate governance in the wider financial services sector.”
> 
> The regulator’s failure to “get tough” with overcharging by Irish Nationwide and the concealment of director loans in Anglo Irish Bank sent out a signal that it was not serious about policing the big banks, the report says.


 
Of course, I imagine there's absolutely no action that could be taken against the board.


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## onq (21 Dec 2009)

An avalanche starts with the first pebble.

What I hope we're not going to see is the usual pillorying of individuals.

The current crisis was precipitated partly by the sub-prime market in the states - lending to people who couldn't pay back seems utterly unwise - and compunded by the unilateral imposition of capital ratio requirements by the B.I.S., and unelected, and so far unaccountable body of bankers.

Granted we were going mad with unwise lending practices here, but the way to deal with this was to slow it down, not bring it to a crashing halt.

Believe me, the Masters of the Universe who ordain such things are out there now picking up prime assets for a song and laughing all the way to their vaults.

ONQ.


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## mercman (21 Dec 2009)

canicemcavoy said:


> Of course, I imagine there's absolutely no action that could be taken against the board.



But words speak. Maybe this forum with a thread of consumers experiences and dissatisfaction might be in order. Then it can be viewed by all, and the regulator might just wake up and take note of such a pathetic financial industry he is overseeing.

In fairness to Joe Meade the Financial Services Ombudsman, he has made some kind of an effort, but I find it difficult for an office to deal with Institutions in a forthright manner, especially when the same institutions are paying to keep the office of the Ombudsman open in the first instance. 

Why doesn't Ireland take the European lead and start naming the Institutions that are acting incorrectly and in blatant violation of best practice in their actions. This in itself might wake up the Financial Services Industry in this country.


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## canicemcavoy (21 Dec 2009)

onq said:


> An avalanche starts with the first pebble.
> 
> What I hope we're not going to see is the *usual pillorying of individuals*.


 
Eh? Is there's one thing that Ireland Inc. consistently lacks, it's responsibility for one's action.


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## Brendan Burgess (21 Dec 2009)

It's a very hard hitting report. No punches pulled.

It can be seen in full [broken link removed]

Brendan


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## mercman (21 Dec 2009)

Brendan said:


> It's a very hard hitting report. No punches pulled.
> 
> It can be seen in full [broken link removed]
> Brendan



Noted, but what are the real chances of any entity taking note and acting upon this report. IMO nobody or no Institution whether regulatory or otherwise.


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## Brendan Burgess (21 Dec 2009)

It's a great report. 

This bit surprises me: 



> In Ireland, consumers have been particularly hard hit by the failure of the FR to adequately intervene to deflate a highly visible property bubble including the failure to clamp down on risky products such as 100 per cent mortgages, interest only mortgages and mortgages with longer terms, some as much as 40 years. The FR also failed to rein in speculative lending by banks to the property sector leaving the banking system highly vulnerable to an external shock.
> 
> ...
> It is not a case that the Panel “is being wise after the event”. The Panel sought a meeting with the prudential executives to report on their work. These requests were ignored at a time when the crisis was imminent. The then Chief Executive Mr. Pat Neary assured the Panel that the „‟ banks were solid, and subject to weekly reviews with the regulation at the highest level‟‟. The Panel raised questions about the FR ability to deal with systemic characteristics of the international financial services market.


I just don't agree that we had a "highly visible property bubble". The majority view from economists at the time awas that there would be a soft landing. That was certainly the view of the Governor of the Central Bank which would have been the  most important view as far as the Financial Regulator would have been concerned.

I was Chairman of the Consumer Panel during the bubble. We raised a lot of issues with the Financial Regulator. We raised the impact of sub-prime mortgages on the consumer. We raised the issue of the increase in unemployment and very high house prices on mortgage arrears. 

I am open to correction, but I don't think we ever said "There is a highly visible  property bubble and you should take dramatic steps to deflate it".

I would love to be able to say "I told you so". But I didn't.


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## mercman (21 Dec 2009)

The Banks themselves should have taken their own course of action to cease careless lending, and not to be told to stop. Whilst there were major errors for property lending.there were as many errors in selling other Financial Products and Investments.

A joke is a joke so matter how often one reads it. Repetition is no joke. Just gets damn annoying after a while.


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## tiger (21 Dec 2009)

Brendan said:


> I just don't agree that we had a "highly visible property bubble". The majority view from economists at the time awas that there would be a soft landing.


Hmmm, that point is debatable.
If you remove the "economists" that were working on behalf of banks & estate agents, then I think there were voices of concern there.


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## canicemcavoy (21 Dec 2009)

Brendan said:


> It's a great report.
> The majority view from economists at the time awas that there would be a soft landing.


 
Brendan, was this the majority view from economists *not employed by vested interests*?

Surely a man as educated as yourself doesn't think that, for example, an economist for Sherry Fitzgerald is going to publically "yeah, it's a big bubble, houses prices are overinflated, it will all end in tears".


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## canicemcavoy (21 Dec 2009)

Brendan said:


> I am open to correction, but I don't think we ever said "There is a highly visible property bubble and you should take dramatic steps to deflate it".


 
Brendan, did anyone on the panel at all every suspect there was a property bubble?

If not, then I'm astounded at the financial naivety of Official Ireland.


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## ChristieA (21 Dec 2009)

At what point do you intervene to stop a property bubble. The economy benefited hugely from the property market in the last ten years. People need to stop blaming others and take responsibility for their actions. Also, when in the last thousand years has Ireland taken a lead in anything besides Irish Dancing contests and the Eurovision?


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## canicemcavoy (21 Dec 2009)

ChristieA said:


> People need to stop blaming others and take responsibility for their actions. Also, when in the last thousand years has Ireland taken a lead in anything besides Irish Dancing contests and the Eurovision?


 
Yes, we've now taken the lead in financial bubbles. You seem to think this is a cause for celebration. 

And no, elderly people getting younger people into financial debt is not an "economy".


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## Brendan Burgess (21 Dec 2009)

This is what John Hurley said in 2007

http://www.rte.ie/business/2007/0711/economy.html

and 

[broken link removed]


> Speaking at a press briefing, Central Bank Governor John Hurley said that the Irish economy performed very well last year and the overall picture is positive with a growth rate of about 5 per cent forecast for this year.  “This level of growth remains favourable by comparison with other economies with broadly similar levels of incomes”, he said.
> 
> 
> The Governor added that there will be some moderation in growth next year, which will reflect a return to a more sustainable level of housing output and more moderate consumer spending; however, the outlook remains favourable, with a projected growth rate of about 4 per cent in 2008.
> ...


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## canicemcavoy (21 Dec 2009)

> *Looking forward, it is important to recall that the major underlying factors supporting the demand for housing are employment growth, *


 
Employment growth itself based on the property bubble. The phrase "pulling yourself up by your own bootstraps" comes to mind.

And that's one guy. According to the Indo:



> Beyond issuing occasional bland warnings of the possible dangers of the over-exposure of the Irish banking system to property-based lending in official Central Bank publications, neither Hurley nor Financial Regulator Patrick Neary seemed to have a clue what to do about the rapidly inflating property bubble.


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## tiger (21 Dec 2009)

Central Bank concern at house price growth 12 July 2006 


> The Central Bank has expressed concern about the recent rises in house prices and said there is an increased risk of a sharp correction to the property market.
> The bank's Governor John Hurley said the recent rises in house prices did not appear to be consistent with the rest of the economy.


http://www.rte.ie/news/2006/0712/economy.html


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## canicemcavoy (21 Dec 2009)

So even Hurley himself was confused.

As for the mythical "soft landing", this has never happened anywhere in the history of housing bubbles. It had about as much scientific basis as a belief in the Second Coming or the coming of Mahdi.


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## Vega (7 Jan 2010)

ChristieA said:


> At what point do you intervene to stop a property bubble. The economy benefited hugely from the property market in the last ten years. People need to stop blaming others and take responsibility for their actions.


 
Totally agree. The FR was established by the government to take the blame for the next financial crisis.  It worked and we all fell for it.  Blaming the regulator for trying to regulate and the banks for trying to lend and developers for trying to make a profit feels somewhat naive.  I would allocate more blame to the collective who bought the risky loans from the banks and paid the silly prices for the property.


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## canicemcavoy (7 Jan 2010)

Vega said:


> Blaming the *regulator* for trying to *regulate* and the banks for trying to lend and developers for trying to make a profit feels somewhat naive.


 
The clue is in the title.

If Patrick Neary felt he didn't have the powers to regulate the banks, then he should have said something, or should have resigned in protest at not being allowed to do his job or being made a scapegoat. Instead, he stayed in the position, famously saying "Okay, that's grand, right I think that's everything" in response to being told about the illicit moving of ILP deposits and then collected a very large severance package. My sympathy for him is limited.

I will say one thing; the report says:



> It says consumers have been hard hit by the regulator’s failure to deflate the property bubble,


 
Did the panel ever warn Neary about the property bubble?


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## Brendan Burgess (7 Jan 2010)

Canice

As you might say yourself "The clue is in what I have written" 




> I am open to correction, but I don't think we ever said "There is a highly visible property bubble and you should take dramatic steps to deflate it".


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## canicemcavoy (7 Jan 2010)

Brendan said:


> Canice
> 
> As you might say yourself "The clue is in what I have written"


 
In that case, it's a tad - a tad, mind - unfair for the Consumer Panel to bring that up now as an issue they had with the FR.


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## Potatoeman (12 Jan 2010)

Vega said:


> Totally agree. The FR was established by the government to take the blame for the next financial crisis.  It worked and we all fell for it.  Blaming the regulator for trying to regulate and the banks for trying to lend and developers for trying to make a profit feels somewhat naive.  I would allocate more blame to the collective who bought the risky loans from the banks and paid the silly prices for the property.



 Nobody wanted to rock the boat and everyone thought they could get rich. What most people failed to understand was the possibility of incurring loss.  Negative equity should not matter to a homeowner unless they are looking to sell. I know its an unpleasant situation but if you borrow money no matter what you spend it on you have to pay it back.


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