Intoxicating babble fails to address real problem

Issues of momentous consequence dwarf that of whether Brian Cowen was hung-over yesterday. And even if he was, so what? By Vincent Browne

Brendan McDonagh, the head of Nama, was financial director of the National Treasury Management Agency (NTMA) in 2007. He told an audience in Tralee last Friday morning that he and his then boss, Michael Somers, became worried about Anglo Irish Bank in 2007 because its vast rate of lending raised doubts about the solvency of the bank.

They just couldn't understand the business model the bank was pursuing, he said, which sounds like they could understand the business model the bank was pursuing and they thought it was reckless. So they decided not to deposit NTMA funds with Anglo, which was some statement about what they thought of that bank.

Asked if they told anybody about their concerns, he said that was a matter for Michael Somers, and we would have to ask him about that. Some of us have been trying to ask Somers about that very issue for some time but he has been unavailable.

At an Oireachtas committee meeting in May 2009, he said the agency had come under pressure in 2007 to resume depositing funds with Anglo and that it had relented, but only marginally – that is, if you think €40 million of public funds is marginal. But in the context in which the NTMA was depositing up to €300 million with AIB and Bank of Ireland, perhaps it was.

Asked at the Oireachtas committee where the pressure came from, my recollection is that he hesitated at first and then said the pressure came from Anglo. I bet it did come from Anglo, but did it come from anywhere else as well?

I find it impossible to believe that the Department of Finance was not told about this or that they didn't find out, and that Brian Cowen, then minister for finance, didn't know about this. This is because Brian Cowen was personally close to some of the people on the board of Anglo and they surely would have mentioned to him that the NTMA was messing them around.

Whether Brian Cowen was personally contacted by Anglo or not, it is just not believable that he did not hear about what the NTMA did and why it did it. This is not how this society works. We are a garrulous lot and surely someone would have said something about this to someone else or, if not that, someone would have noticed what the agency was doing.

The point of this is that the Government must have known in 2007 that there were serious doubts about Anglo and they did nothing about it – an act of quite disastrous negligence, for which they would probably face charges in Iceland.

It is not that Anglo could have been saved in 2007, rather that strategies could have been put in place then to allow it a peaceful, inexpensive burial, without the rest of us having to pay for their recklessness. The panic of September 29th, 2008, could have been avoided. That contagion thing, which propelled Brian Cowen and Brian Lenihan into giving the blanket bank guarantee, because of alarm over Anglo, could have been defused.

We are talking here of certainly €25 billion, maybe €30 billion, maybe €35 billion or even €39 billion as Anglo chairman Alan Dukes seemed to concede last Thursday night.

There was fuss on the radio yesterday about Cowen's dismal performance earlier on Morning Ireland ; the weary voice, the robotic answers, the snarling responses, part of his persona as Taoiseach now (incidentally, a persona very different from what I have perceived on the few occasions I have socialised with him). But does this public persona thing matter anymore?

Aren't there issues of such momentous consequence that dwarf whether he was hung-over yesterday. And even if he was, so what?

There is a great deal of talk about what Anglo will cost "the taxpayers", that ideologically loaded phrase that does so much to distort debate. But given the politics we have, it is not "taxpayers" who will pay most for this, it will be paid for by the degeneration of our public services and by those dependent on welfare payments.

And that is true of the coming budget as well. Whether the "adjustment" will be €3 billion or €4 billion, it is certain the bulk will come, not from the old "taxpayers", but from new taxpayers, those deemed too poor to be included in the tax net until now, and from those dependent on public services and welfare. Yes, a few tax breaks will be closed off but the preponderance will come from the other sources.

We are in a precarious place now because of our politics (and I am not talking about Brian Cowen's alleged hangover) and a broken State.

The problem with our politics is that we ignore the reality that while the State is broke, society is very rich, probably the 16th richest in the world on a per capita basis, richer than France. But there is no willingness to use our society's riches to fund the State properly and because of that mindset, compounded by the gigantic cost of the bank bailout, the State may default, which might not be a bad thing.