Of Laws and Men

Chartered accountant Kieran O'Donnell T.D., Willie O'Dea's gift to the Fine Gael parliamentary party, has been expressing himself on the banking crisis. I am going to criticise Mr O'Donnell below, but it is only fair to observe that he is making the best of his opportunities, and that he is clearly not lacking in either political perspicacity or expertise in financial matters. His questions to the Financial Regulator last month were often intelligent and incisive, even if the politician in him was winning out over the financial analyst, in my humble opinion.

However, his political side seemed to be hold pretty monopolistic sway for the entire of his contribution to the George Hook programme last night. In his view - which in essence is not too different to views also expressed by Henry Paulson, Gordon Brown, Richard Bruton and many others - the pressing need is for the Government to "put manners on" (he actually used that phrase) the banks and force them to resume lending so that "business does not grind to a halt".

Now, like most people, I am, ahem, not entirely independent of the credit system, and will not be enjoying the sclerosis of the money supply. It is understandable that politicians and the representatives of business interests should be concerned, but something seems amiss here.

It is easy to forget it, but I thought that the consensus view about the Irish banks was that they were in their present straitened position because they had been too keen to lend money. Is this correct or not ?

If it is correct, and it is at least partially so in my view, then surely the bankers are acting sensibly and prudently in restraining themselves now ? This is all the more true in circumstances where developments in the broader economic climate mean that the supply of sensible lending opportunities is less. Are Deputy O'Donnell and the others suggesting that the banks should continue to behave as if the outlook for getting their money back is as good as it was before the so-called Credit Crunch began ?

It is, I am afraid, economically illiterate to suggest that the function and/or the duty of banks, when the business climate deteriorates, is to shield their customers from the weather. Not many people, whatever their political view, believe that banks are charitable organisations.