Rules. They are there for a reason. When dealing with financial products like insurance, the financial regulator sets the rules. The rules are there for a very good reason: the consequences for the public for a large insurer getting into financial difficulty are enormous.
Ireland has had a very poor regulatory environment up until now. I have no doubt the blame for much of the excesses can be traced to the financial regulator and its inactions over the boom years. Now we have a new regulator, interested in imposing tougher standards on those companies whose businesses fall under its remit. Quinn insurance is one such company. The company is clearly in some difficulty, but I don't want to get into commenting on specifics in the Quinn case, because I'm simply not qualified. When it comes to a company's books, I feel anyone who isn't a qualified accountant should refrain from comment.
What I want to talk about is the attitude to the rules. Once the regulator installed Grant Thornton as administrators, The Quinn group, we are told
fought back by orchestrating street protests and political action designed to reverse the decision.
Sorry, what? What?
There are rules, and when they aren't followed, either one complies with them and gets on with it, or one takes the penalties imposed, and moves on. One does not organise street protests and call in favours to change the rules. That's exactly how we got into this mess in the first place. Regulators must be empowered to enforce rules credibly, without fear or favour. Regulators should be empowered and encouraged to prosecute anyone who tries to interfere with their operation, from the Taoiseach on down. The regulator can, and must, act in the public interest, to safeguard the interests of the country, because that's its job. To do otherwise is to lead Ireland back down the road towards a banana republic.
In all of this, we are told to think of Quinn employees. I'm not thinking of Quinn's employees, but of their management. If Quinn is a viable business proposition (and again, I'm in no position to comment on the viability of this business, and don't want to. Go somewhere else for that), then someone will buy it, and the existing management will get the chop, thus saving the employees. If Quinn is semi-viable, then a restructuring plan from the private market under the supervision of the regulator will see it through. If Quinn is not a viable business any more, then many of the workers will have to be let go, and bits of the business carved up and sold out. This is a consequence of not playing by the rules, and Quinn's employees should be protesting outside their management's offices, rather than the government. Why? Because it seems the management broke the rules.
Systemic Importance. The rhetoric of 'systemic' importance is beginning to be bandied about again. This is a ruse, designed to distract from the very concrete balance sheet problems one large and clearly well connected company has, and the rules it is breaking. Forget this posturing. Regardless of its relationship with the nationalised Anglo Irish Bank, Quinn insurance should not be considered of systemic importance. It isn't. The worst case, and most unlikely, scenario, the total collapse of Quinn tomorrow, would result in the loss of 5,000+ jobs, and the transfer or payout of policies, and that's it. Nothing else would happen. These aren't small potatoes, but they aren't going to sink the Irish economy. That's the definition of systemic importance. Your heart is of systemic importance. Without it, you're a corpse. Your finger, even your arm, is not of systemic importance. I'm not saying it would be fun to lose either--but clearly, you can't make the argument an arm is a heart. Quinn is an arm, not a heart.