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Central Bank accused of turning blind eye to crisis warnings

The bank’s former governor has denied explosive claims that he ignored evidence of an imminent financial crisis.

Frank Browne had responsibility for the Central Bank's financial stability from 2003 to 2010.
Frank Browne had responsibility for the Central Bank's financial stability from 2003 to 2010.
Image: RollingNews.ie

SENIOR MANAGEMENT AT the Central Bank “suppressed” warnings about Ireland’s financial instability, a former official at the bank has claimed.

Frank Browne told the Oireachtas banking inquiry that reports pointing to the risk of a property bubble as early as 2004 were “toned down or even ignored” by leading executives.

Browne said the Central Bank selectively used research to “convey externally a misleading impression of the true state of health of the financial system in Ireland”.

“It appears to have culminated in 2007 in the suppression of important information on the underlying health of the overall financial system,” he said.

Browne also alleged that he had relayed concerns about the country’s finances directly to the Central Bank’s former governor, John Hurley, who once asked him, “Whose side are you on anyway?”

He added: “If there had been sufficient engagement on these issues earlier and sufficient attention devoted to teasing out the issues, the property bubble and liquidity problems may have been addressed at an earlier and less acute stage.”

21/5/2015 John Hurley  Banking Inquiries John Hurley retired as Central Bank governor in 2009. Source: RollingNews.ie

Refuted

However, Hurley has rejected claims that he avoided acting on warnings about the property market.

In evidence published by the banking inquiry yesterday, he said he was not aware of any dissenting opinions within the bank on the health of the financial system.

“If senior economic staff had different views, then those views should have been put at the time. This did not happen,” Hurley said.

The former director general of the bank, Liam Barron, also refuted the allegations, claiming Browne had in fact “embraced the views of the International Monetary Fund that the experience of past housing market crashes would not be repeated”.

Read: It desn’t look like Bernard McNamara will be giving ANYONE his number

Read: Ex-Anglo CFO: “I don’t think anyone foresaw the scale of crisis”

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Catherine Healy

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