Hindsight is a wonderful thing, but it is still worth pondering how a man whose nickname was “Fingers” could be left in charge of a building society for 38 years, eventually driving it into the ground at a cost of €5.4 billion to the taxpayer.
Michael Fingleton was known for courting the media, giving freelance journalists mortgages – at a significant premium to the market interest rates – when other lenders were reluctant to do so.
But his ability to circumvent normal lending practices at Irish Nationwide to curry favour with the media was just the tip of the iceberg. It may have shielded him from some unfavourable coverage, but the malaise that allowed him to take over and bankrupt a building society was far more widely spread than that.
The reluctance to challenge the institutional power that characterised Ireland in the 1980s and 1990s extended well beyond the Catholic Church and into politics and business. The mirage of probity that protected these institutions from scrutiny was part of the Fingleton story.
It is the reason nobody shouted stop as the former seminarian took control of a building society set up in 1873 to help people buy homes and turned it into a profligate lender to property developers.
It didn’t happen overnight. Fingleton joined the society in 1971 – from Concern where he had worked in Biafra – as its senior executive. He greatly expanded its branch network and loan book over the next 20 years, changing the name from Irish Independent Building Society to the more ambitious sounding Irish Nationwide.
Come the 1990s and the changes that allowed building societies to lend for house building and construction, he got progressively closer to several Irish developers and followed them to the UK. By the time it collapsed in 2008, Irish Nationwide’s commercial loan book was reported at €8.18 billion, nearly 80 per cent of all loans. He also got richer, amassing a personal fortune put at €75 million, including a €30 million pension pot.
This all happened in plain daylight. Fingleton concentrated power in his own hands and surrounded himself with a compliant board under the purview of the Central Bank of Ireland – and its successors – which adopted a light-touch, relationship-based approach to regulating banks.
This deferential approach to regulation assumed that the people who ran and presided over financial institutions were prudent and honest. It echoed, in a way, the obsequiousness that characterised Irish society’s attitude to the Catholic Church and other institutions.
This was, after all, the State that had a taoiseach nicknamed “The Boss”, who was manifestly living beyond his means in a north Co Dublin Georgian mansion.
The hands-off approach continued with the creation of the Irish Financial Services Regulatory Authority (Ifsra) in 2003 and its now much vilified “principles-based” approach.
Despite the new body being intended to give confidence that the rapidly expanding financial services sector was subject to the necessary oversight, the Ifsra adopted the lightest possible light-touch approach. The extent to which Fingleton and others influenced the approach of the new regime remains parked in the “let’s not go there” box when it comes to poring over the entrails of the 2008 crash.
But three separate banking inquiries and reviews found examples of how concerns raised with the new regulators about the management of Irish Nationwide were, in effect, swatted away by Fingleton under the light-touch regime.
This was despite the start of a stream of revelations in banking and elsewhere. The Ansbacher scandal had exposed Haughey as a man of straw, highlighting endemic corruption in the banking system which was further exposed by the Dirt deposit interest retention tax scandal in 1998.
But it took a global financial collapse to reveal what had been staring us in the face: we had a banking system riddled with corruption and incompetence and overseen by a feeble regulator with a culture of servility that matched that shown elsewhere by the State.
[ Death of Michael Fingleton closes door on dark era for Irish bankingOpens in new window ]
The National Asset Management Agency, established in 2009 to take over the bad loans of Irish Nationwide and the other banks, took a more clear-eyed view of Ireland’s financial and property elite.
Fingleton was forced out, and Irish Nationwide was subsumed into the Irish Banking Resolution Corporation (IBRC) along with Anglo Irish Bank, whose management had run Fingleton a close second in terms of incompetence under a supine regulatory regime.
Attempts to hold Fingleton to account by the Office of the Director of Corporate Enforcement and IBRC – which sued him for €290 million – came to naught. A Central Bank inquiry into his stewardship of Irish Nationwide was terminated in 2019 due to Fingleton’s ill health after suffering a stroke.
Michael “Fingers” Fingleton died on Sunday.
If you find it hard to believe the existence of a national capacity for gullibility implied by Fingleton’s rise and fall, stop for a minute and consider the weight we attach today to the self-serving utterances of tech billionaires about things they know little about.
