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Ireland's new hero: a financial regulator

Matthew Elderfield faced down a popular businessman and gave bankers a tongue-lashing.

A man walks past the head office of the Bank of Ireland in Dublin, May 28, 2007. The government set up the new National Asset Management Agency to buy 80 billion euros worth of bad loans from the Irish banks. (Luke MacGregor/Reuters)

DUBLIN, Ireland — In the middle of its worst-ever financial crisis, Ireland has found an unlikely new hero, who has secured that status partly by facing down one of the country’s most popular business tycoons.

The latest national icon is Matthew Elderfield, an Englishman recruited last year from Bermuda, where he was financial watchdog, to become Ireland’s Financial Regulator. His mission could be defined as ending Ireland’s crony capitalism — otherwise known as “light-touch” regulation.

Last week Elderfield shocked and delighted the nation by giving something of a tongue-lashing to bankers while appearing before a parliamentary committee in Dublin. The main focus of Elderfield’s testimony was his decision two weeks ago to appoint a receiver to one of Ireland’s largest insurance companies, the Quinn Group, because of doubts about its solvency. (In Ireland a receiver keeps a company operational while trying to find a buyer.) Elderfield's move sparked an uproar of the kind that in the past might have forced a retreat.

Sean Quinn is a popular entrepreneur who has created more than 6,000 jobs in a deprived border area. Quinn wrote angry letters to government ministers, and his workers, fearful for their jobs, staged several demonstrations. But on Thursday he raised the white flag of surrender when the High Court in Dublin confirmed Elderfield’s decision to take over the company.

Sean Quinn’s basic problem is that he owes 2.8 billion euros ($3.8 billion) from the collapse of Anglo Irish Bank, a debt that caused the company to breach solvency rules. Anglo Irish Bank is at the center of Ireland’s banking catastrophe, which stems from the irresponsible and greedy acts of a golden circle of bankers, politicians and developers during the property bubble that lasted from 2000 to 2008. Several bankrupt property developers have debts in the billions and the government is pumping up to some 22 billion euros of taxpayers’ money into Anglo Irish to keep it from collapse.

The administration has set up the National Asset Management Agency (NAMA), to buy 80 billion euros worth of bad loans from the Irish banks, using government bonds that can be converted into cash by the European Central Bank. The chief executive of NAMA, Brendan McDonagh, is also emerging as a white knight in the war on cronyism.