The Commission of Inquiry has now been refused any assistance & cooperation from the European Central Bank. The investigation into, and postmortem on the Irish Banking crisis will also steer clear of scrutinising the biggest own-goal in the Financial History of the state, when on 28th October 2008 the Irish State guaranteed a dishonest & bankrupt domestic Banking industry that was aided & abetted by both Irish & European Regulators. To come across as a worthwhile & all-encompassing undertaking the Inquiry must grasp the nettle of ‘Regulatory Capture’.
This is an elaboration of Light-touch-regulation. It is a theory (developed by George Stigler, Nobel lauriate economist) and subsequently recognised by Wall Street Bank Investigators. It describes a process by which Regulatory Agencies over-time, eventually come to be dominated by the very Industries they were charged with regulating. Regulatory Capture occurs when a Regulatory Agency, formed to act in the public interest, eventually acts in ways that benefit that same industry that it is supposed to be regulating, rather than the public,