There's bad news on the way for Irish banks; Jerry Beades is quite a fan of the new Financial Regulator Matthew Elderfield. As a scourge of the banks in the last five years Beades was highly critical of the former regulator Patrick Neary over his failure to crack down on sharp practices by banks. Dismissed by Neary, Beades (who runs pressure group Friends of Irish Banking as well as his own construction business) says the new regulator and Central Bank governor Patrick Honohan are taking his members' grievances much more seriously and are even acting on them.

His criticism of the Irish banking sector stems from a case against ACC Bank, which was ordered by the High Court last year to pay Beades €4.7m in damages. He is convinced a lot of the banks cut corners during the boom, some of which have yet to fully emerge, and that will end up costing both the banks and their customers. Beades now feels vindicated that his criticisms were accurate.

"The former regulator did absolutely nothing. He [Elderfield] has a different idea of how to do things. There are different rules in town now. That is the stuff we need. What was going on in the banks was not good for the economy. What I have seen that has gone on wasn't good for Ireland," Beades said.

A close associate of former Taoiseach Bertie Ahern, Beades (51) is well-known in building and property development circles. He hit the headlines last month when he called on Brian Cowen to instigate a major reshuffle of his cabinet. In an unprecedented outburst from a party insider, he demanded that the government axe six long-serving cabinet ministers and bring in fresh blood. The move was prompted by his concern that the government was failing to respond to the urgent need to get credit flowing through the shattered economy and to focus on the agenda of businesses. In the end, the Taoiseach didn't cull six ministers, but Beades is optimistic that the changes that were made have been positive.

"There were six changes. It wasn't six fresh faces but it was some movement. There seems to be a change and ministers seem to be a bit more fired up lately. I feel the message has got through that the public want to see changes."

According to Beades, companies (and not just those in construction) have been suffering for nearly four years now. The economy for him began to decline in late 2006 and, in particular, after the traditional builders' holidays in August. "There was a complete slowdown after the August holidays. You noticed people weren't paying up as quickly. Cheques started to bounce. Then the banks stopped lending, even if you had good assets," he said.

Like everyone else in the industry, Beades has seen his construction activities hit hard. His ready-mix concrete business, which he set up a decade ago, has had to close. As a veteran of the building industry, he said part of the problem was that the separation between builders and property developers became blurred. Instead of ensuring they made a profit on their contracting operations, many were prepared to make a loss, knowing that the ever-rising property market would make up for it.

"While there was huge return on property development, actual building contracts weren't making the profits that were consistent with the turnover. Our wages were the highest in Europe. What was happening was that all the contractors were losing money on construction but making development profits," he said. The wages being paid to bricklayers and other tradesmen were "off the wall".

Beades said he hasn't bought new land for development in Ireland for some years as he couldn't see how to make a profit given the surge in land prices and the cost of building.

"I looked at stuff that didn't make sense. I bought nothing from 2002 onwards. The prices didn't make sense. How was I going to recover money when construction costs were off the wall on top of site costs that didn't make sense? We would never have made a profit."

It was at this point that the Financial Regulator should have stepped in, he says. So what could the regulator have done differently?

"If you had a regulator that took some basic action, we wouldn't have had half the mess. What could he have done? Take the big development loans [as an example]. If they [the developers] had to produce 20% of the price upfront... if so much interest roll-up was prevented by the regulator, then it mightn't have been as bad."

He also believes that the banks were far too loose when it came to offering large loans to major developers without watertight security.

"You might want €10m to €15m and there would be all sorts of information demanded, which is right. For a lot of us, money was not slopped around. But it was quite clear that there was a golden circle of people operating who could get enormous loans without offering security. The banks chased these people, now they are suffering. I wouldn't be a fan of Nama but it is a necessary evil. It is a disgraceful amount of money that is going to be spent, not just now but for years and years to come."

He is, though, confident that the bottom for property prices has been reached and that some value has returned to the market.

"Rents are still holding up and that is an indication of demand so at the right price people may be prepared to buy. There is value inside the M50. Outside that I don't know what you could do with it as you don't have the population growth. In a couple of years you will see all the surplus property cleared out of Dublin. Outside Dublin, I don't know what is going to be done with these ghost estates."

Still, the problem remains the reluctance of banks to resume lending. He rejects the idea that banks are not curtailing credit. Customers are being urged not to apply as a failure to get an application approved would go against them in future, he said. It is through this and other tactics that the banks are restricting credit. A solution, he said, is for the government to step in. In previous recessions it had two banks – ICC and ACC – to ensure credit flow. Setting up another state investment bank or using Anglo Irish might be an option, he believes.

"We had two government banks and that model worked well through really tough times and it must be something that has to be looked at again. We can't go on like this."

Curriculum Vitae

Jerry Beades
Position: Owner Jerry Beades Construction; member of Fianna Fáil national executive
Age: 51
Family: Three children, lives in Clontarf
Hobbies: Motorsports