More than Merlin's wand is needed to solve bank issue
The province urgently needs a social contract tailored to local demands, says Alan Harper
A year ago, the leaders of the four main churches drew attention to shared pastoral and moral concerns over the impact of the lending policies of our four local banks.
We had been made aware of family businesses torn apart and serious impacts upon the mental and physical health of ordinary people affected by the prevailing banking culture.
The response from across the community made it clear that we were not alone in our concerns. MLAs, Executive ministers and the wider business community responded positively to our representations.
Meetings were held with representatives of the four banks. Positive responses were made over matters like the need for improved training of bank staff especially in dealing with customers under pressure.
There was also acknowledgment of the demand for local bankers to be enabled to make lending decisions based on local knowledge.
There was also a measure of acknowledgment by the bankers that bad lending practices during the boom years had contributed to the seriousness of the current situation.
It remains the case, however, that we are all to blame for what happened and the banks did not force people to over-reach themselves.
Northern Ireland has very a special set of local circumstances. The province's economy is heavily dependent on the public sector and it is to the private sector that Government is looking to help us 'grow our way' out of recession.
Northern Ireland has to get back to work and we need the banks to help us.
The Chancellor, when he announced the terms of Project Merlin, declared that it was time to move on and that the banks were absolutely crucial to recovery.
In the spirit of 'moving on', it is necessary to ask a number of questions and to invite our political leaders who will shortly seek to secure a mandate to respond.
First, can somebody please tell us whether, or to what extent, Project Merlin applies to Northern Ireland? Three of our four banks are based outside the UK and the £10m threshold applies to very few of our businesses.
Second, where do we stand on the matter of local accountability? The regulatory system for banks is that which is appropriate for Great Britain. But is it appropriate for Northern Ireland?
Could a banking ombudsman for Northern Ireland be introduced similar to the Credit Review Office established in the Republic?
Might the Assembly put in place an Assembly Oversight Committee capable of gathering and verifying statistics and performance data and representing the public interest in the scrutiny of private business - including the banks? Could there be the provision of a boardroom/governance obligation to take account of the moral and social obligations of business and the banks?
Third, do we need to find alternative systems for the financing of business?
If banks are not particularly interested in lending to businesses, do we need to put in place an alternative funding source - a kind of Northern Ireland credit union for small business?
Workers need reliable employers; businesses need a viable business model, access to finance and reliable partners; shareholders need a reasonable return on their investment; and government needs all of the above to maximise tax revenues and minimize social security costs.
We need one another: at this time, we especially need to forge new relationships of trust and confidence among partners in a social contract locally adapted to serve the local good.