Failure to predict change, ignoring the worst-case scenario and assuming certain tasks were someone else’s responsibility are sins at the root of the Irish banking crisis – and they were perpetrated by bankers, central bankers, regulators and politicians alike.

These are themes repeated in a report into the crisis by new central bank governor Patrick Honohan. The report is one of two released yesterday, the other by Klaus Regling and Max Watson. Both are precursors to a statutory investigation.

Mr Honohan says that bank management failed to maintain ‘safe and sound’ practices; that government policies were unduly ‘accommodative and procyclical’; that regulators were ‘deferential’ and unwilling to rock the boat; and, perhaps most significantly, that the central bank and regulator (CBFSAI):

do not appear to have realised – or at least could not bring themselves to acknowledge – before mid-2007 at the very earliest, not only how close the system was to the edge, but also the extent to which the task of pulling it back from the edge fell to the CBFSAI

Some of Mr Honohan’s points seem guilty of ‘confirmation bias’ – they are Read more