The widespread explicit criticism of incentive structures contained in the recently published Review of Remuneration Policies and Practices by the Central Bank would bear more moral authority if the Government had not made the recently inaugurated Central Bank Commission another haven for political appointees and former overpaid bankers.
It is all very well for this Central Bank review to advocate the necessity for non-executive directors of banks to step up their scrutiny of remuneration arrangements but virtue is never spawned in a vacuum and it never flourishes in circumstances where leadership is not underpinned by compelling and principled good example. If Irish domestic banks had not demonstrated contempt for the concept of the common good for a very long time there would be no crisis - but they continue to do so. Their practices of paying obscene levels of remuneration are fully insulated by a culture of indifference to the common good that is secured by a phalanx of cronies and yes-men that serve on their boards of directors. These boards are preoccupied and obsessed by their own self-interest. They have demonstrated that they are incapable of embracing any fundamental change and, according to NAMA, they tend to be economical with the truth when it suits them. They bear no responsibility for the consequences of their decisions because the government insists that moral hazard passes seamlessly, totally and relentlessly to the taxpayers of Ireland for whom there is no apparent ceiling to the burden that is thrust upon them.
The next phase of Ireland’s lost sovereignty will become manifest when the ownership of the domestic banks inevitably falls into foreign hands because they are incapable of resourcing themselves adequately and winning the trust of stakeholders whose support, investment and benevolence is vital. Irish banks will then be accountable to foreign regulators whose exhortations will likely carry more weight and the domestic financial sector will be reduced to credit unions. The Central Bank will have no control over the banks but remuneration paid by them may only moderate at that stage.