Role of Financial Regulator

Any optimism that the Regulator may put these issues behind them and learn from these mistakes and scandals?
 
Praise to the likes of Eugene McErlean, I don't know what price he has paid but I hope he does really well in life. The likes of him seem few and far between in our completely hopeless financial and regulatory country.
 
Damian85 said:
Any optimism that the Regulator may put these issues behind them and learn from these mistakes and scandals?
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maybe i'm a cynic but i dont see any reason to be optimistic, the Financial Regulator/central bank needs to be radically overhauled

employ sufficiently qualified people for top jobs not life long civil servants
ensure Regulator & Central Bank have sufficient Powers
ensure Minister for Finance is fully aware of all issues of national relevence
ensure the close relationship between FR and CB is split
ensure FR does his job properly, if he does his job right, the banks do their jobs right, simple as

for example, howcome Bernard Mandoff is currently in jail in the states, while people here who have been done from fraud such as that pryamid scheme guy Breffni are walking the streets as free men while their victims are left out of pocket?
We need to ensure firstly the FR has sufficient power to come down hard on the banks when needed, then we also need to have adequate legislation in place to ensure white collar crime will be dealt with properly.
 
In between the FR and the Minister is the IFRSA board with oversight duties.

It is incomprehensible to me that they have not been asked to resign as a body.

Of course they are just the usual political appointees lining their pockets at our expense and looking after their own.

Centaur
 
Fianna Fail bring in Sir Moneybags from the City to advise on financial regulation. This is how far the so called republican party have drifted from their ideals and also how devoid of ideas or expertise they are.

Now we have a banking commission with consumer information being moved to Cork. Is this another version of decentralisation?

The banking sector must be thrilled.

The sooner somebody runs an enema through the banking system to expel the accumulated toxins the better.

I hope all those people getting pension statements and savings statements let their financial providers have a piece of their mind about what type of behaviour will be demanded of them in the future.
 
@Damian
While it appears the credit union regulator was more active it does not mean it was more effective. Yes the regulator has been active but is hamstrung by a law that does not permit it to publish mandatory codes of conduct or business rules. Worst still it is hamstrung by a reluctant government which remains politically captive of the ILCU and fearful of its lobbying power.

Had the Register of Credit Unions, an office created in 2003, been listened to in 2004 and legislation changed to restrict credit union risk taking, they would not have lost 500m+ in their “investment” portfolios.

The regulator was forced by the Irish Finance Ministry to go through a protracted convoluted consultative process, during which the ILCU and its partner Davy refused to agree to a voluntary code and then obfuscated and lobbied Government over the head of the regulator. The result was watered down investment restrictions issued in a non-binding code in late 2006 by which time it was too late.

Good regulation has to be timely to be effective and regulators should have the support of civil service and governing Ministry. This has not been the case with credit unions in this country. Instead what we have is a powerful trade body which threatens votes when its corporate agenda is likely to be weakened.

Quite the most disgraceful aspect of this behaviour saw the ILCU actively lobby against a state deposit guarantee for credit union savers.
 
Hi Kaplan

Just to be clear though, I don't think that the Regulator should be blamed for this. The Registrar of Credit Unions did everything possible to impose discipline on the Credit Unions. He resisted the wishes of the Department of Finance as far as he could. He effectively stopped them from making long term loans for the purchase of property. He is now stopping those which are making losses from paying dividends. He is doing a very good job under the difficult circumstances which you outline.

If the Financial Regulator had taken a similar line in its dealing with the banks, we would be much better off.

Brendan
 
@Brendan
The blame rests with three parties (1) ILCU for promoting a high risk investment strategy, (2) credit unions for following it and (3) a Minister for Finance who did not do what the regulator asked him to do. I have called the process enforced forebearance - which occurs when politicians become captive of trade body self interests and force a regulator to back down.

The regulators initial restrictions would have brought Irish credit unions into line with their international counterparts. In other jurisdictions, including the US with its multi-billion dollar credit unions, they are only permitted to invest in bank deposits and government stock.

This year Irish parochial politics (more particularly the Fianna Fail variety) may once again get in the way of prudential regulation and supervision; credit unions may be allowed to raid their reserves. It's a good test of the current Minister's mettle in standing off the intense lobbying of the ILCU and activists who are currently gearing up.

The galling thing is had the regulator been listened to and acted on, most if not all of the €500m+ in investment losses would not have happened. Still I can't help thinking that it did not exercise its full powers in cases of glaring non-compliance - which of course may result from Merrion Street ambiguity and memories of the great DIRT fight which forced a previous Minister (McCreevy) to climb down as the then coalition was threatened. Watch for the independent TD's positioning on use of credit union reserves - the scene is set for another political compromise.
 
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