A high level probe into the collapse of the Celtic Tiger has slammed the ‘herd instinct’ that brought about the downfall of Ireland’s banking sector.
The Nyberg Commission has claimed that greedy banks chasing the profits made by Anglo Irish were among the chief causes of the banking crisis.
Led by former Finnish civil servant Peter Nyberg, the draft findings of the commission conclude that it is ‘difficult’ to assign blame more specifically as so many parties share responsibility to some degree for the crisis.
A failure to fully understand the property market and a belief that prices would continue rising before a ‘soft landing’ also led to the crisis which has crippled the country financially.
The Government, the financial regulator, the banks and even the media are all blamed by Nyberg in his initial report.
His findings concluded that there was a lack of critical debate across Irish society about the scale and sustainability of the economic growth and the property boom.
“There was a general view that property values would not fall, which contributed to the growth in property lending and excessive risks taken by the banks,” found the Nyberg Commission.
It also blamed the media for ‘supporting the profit and share growth of the banks during the boom while being dismissive of warnings that suggested the growth was not sustainable’.
Those interviewed by the commission have received the draft report which is due to be submitted to the Minister for Finance later this month according to the Irish Times.
Nyberg has also identified the rapid growth policies of the Anglo Irish Bank and Irish Nationwide Building Society, then mimicked by other financial institutions, as key factors in the collapse as lending controls were over-ridden.
The report also claims that ‘the rate of growth at the banks was not supported by adequate internal controls’.
Anglo’s strong internal risk controls were ‘ignored as the bank increased its loan book’.
Nyberg was commissioned by the Government last year to investigate lending practices at the banks from January 1st, 2003, until January 15th, 2009, the day of the nationalization of Anglo.