LONDON (MarketWatch) -- Two reports into Ireland's banking crisis have found that the government, financial regulator and banks must all shoulder some of the blame for the country's predicament.
Patrick Honohan, governor of the Central Bank of Ireland, said there was "comprehensive failure" among bank's management.
He said bankers "ignored sound business practices, instead incurring huge external liabilities in order to support a credit-fuelled property market and construction frenzy."
Government policy, on the other hand, encouraged the property boom, with politicians relying too heavily on unsustainable growth in construction to fund spending, Honohan said.
"This helped create a climate of public opinion which was led to believe that the party could last forever," he added.
However, the central banks and Financial Services Authority also came in for heavy criticism for being "too deferential and accommodating" to banks and for spending too much time reviewing firms' risk-management procedures and governance, and not enough time looking at the actual figures and capital levels.
Once the banks have transferred their property-related loans to the National Asset Management Agency -- the Irish bad bank -- the government will have issued 40 billion euros or more in guaranteed NAMA bonds and written off around €25 billion in unrecoverable capital injections into Anglo Irish Banks and Irish Nationwide Building Society no fax cash advance.
"Apart from the experience of Iceland, this has turned out to have been the poorest performance of any banking system during the current global downturn," said Honohan.
In a separate government-commissioned report, economic consultants Klaus Regling and Max Watson said the financial crisis was clearly influenced by the global credit crunch, but in the most crucial ways was "home-made."
"Official policies and banking practices in some cases added fuel to the fire," the report found.
"Fiscal policy, bank governance and financial supervision left the economy vulnerable to a deep crisis, with costly and extended social fallout."
