Watchdog 'failed to act to halt meltdown'
Ireland's financial watchdog did not have the bottle to bring Anglo Irish Bank to book over risky lending and stop other banks jumping on the bandwagon, a damning report has found.
The inquiry into the cause of the country's banking crisis has found authorities, including the Central Bank, did not understand the dangers of a property boom.
And it found the cause and scale of the €70bn (£61bn) meltdown was homegrown, while worldwide recession has made it worse.
Finnish banking expert Peter Nyberg also shattered claims, put up by former Taoiseach Brian Cowen, that the collapse of the US bank Lehman Brothers sparked the Irish crisis.
He said the top bank executives paid little attention to risks they were taking through shockingly large lending and chasing Anglo's growth rates.
The Irish government said it would hold a referendum later this year to give parliament more power to hold inquiries and demand witnesses answer questions.
The 156-page Nyberg report does not name and shame but attacks a herd mentality from 2003-2009 as Anglo - which is costing €30bn (£26bn) to wind down - was lauded by investors, analysts and ratings agencies as the role model for Irish banking.
Mr Nyberg said that the Irish crisis was exceptional as large sections of society let the good times roll until the very last minute.
"Property was the only game in town," he said, before adding that buying two or three homes was a "no-brainer".
In one hard-hitting line, Mr Nyberg summed up the failures of the top executives in the banks: "It appears now, with hindsight, to be almost unbelievable that intelligent professionals in the banking sector appear not to have been aware of the size of the risks they were taking."
Although he said government failed in some respects, he backed the controversial September 2008 bank guarantee scheme - the late-night, then-undocumented, decision to let the State protect the banks.
The report said the inquiry uncovered a lack of scepticism and appetite in the Regulator's offices to prosecute the challenges.
In response to the report, the Regulator said it had made significant changes to take on staff, adopt more rigorous enforcement and bring in corporate governance rules.