One of the more significant findings of the banking inquiry report by Central Bank governor Patrick Honohan was that the financial regulatory officials were too deferential to the industry and institutions they were supposed to be regulating.
The problem, according to Honohan, came about because of a "conflict" between two seemingly contradictory goals: the regulator was required by law to pursue financial stability while promoting the financial sector.
The consequence of this dual mandate was that former financial regulator Patrick Neary would accompany, for instance, the chief executive of the Irish Stock Exchange to New York or London to help persuade big financial companies to list funds and debt securities in Dublin.
It was impossible to tell whether the Financial Regulator was a sheriff or a shill. This wasn't helped by the pull of lobby groups on the regulator and the Department of Finance, both of which Honohan depicts as rather pliable and solicitous of industry needs, even at the expense (as we now know) of financial stability.
When Matthew Elderfield was hired to replace Neary from a similar job in Bermuda, regulatory consultants pointed out that he would bring not only a fresh perspective on regulation, but also a network of contacts in the insurance and funds industry. Is the danger of mixing regulation with salesmanship still present?
"I think the conflict is in the process of being resolved," said a spokesman for the Irish Banking Federation (IBF). "The Central Bank Bill makes clear the regulator will not have this role of promoting international financial services."
Honohan has referred to the removal of the dual mandate, telling Vincent Browne in a pre-recorded TV3 interview last Wednesday that "it was a goal set for the Central Bank that was a sort of potential conflict of interest, which I don't think is healthy and it's not, it's going to be swept away in the new legislation".
Even if the dual mandate of the Financial Regulator no longer pertains legally, it persists unofficially in a slightly revised form – in the actions of the financial lobby groups, as well as in many of the public statements made by the new head of financial regulation, Matthew Elderfield.
"It's still going on," said one financial source. "There are a whole series of inputs and representations as part of the consultation process. It's the regulator's job to decide whether these positions have merit."
Nonetheless there are "misgivings" in the sector, according to the source, about the change in regime when it comes to lobbying and promotion. This is part of the reason for John Bruton's appointment as chairman of IFSC Ireland, a new subgroup of the IBF which will represent the interests of the IFSC at state and EU level.
"The sector appointed Bruton in partial recognition of the new reality," said the IBF spokesman. "There is one less player promoting Ireland as a location."
Yet some of the themes sounded by Bruton in his inaugural address echo Elderfield's own speeches, delivered while the new regulator has been doing the rounds of financial services groups in the past three months.
"I believe it is critical that Ireland have a reputation as a thorough, rigorous and pragmatic regulator of the industry," Bruton said. "It is all about winning and holding trust, and in that there is no divergence of interest between regulator and regulated."
Elderfield has made the same argument numerous times, especially with regard to Ireland's well-developed funds industry and burgeoning reinsurance sector. In his first public address, to the Leinster Society of Chartered Accountants in March, Elderfield explicitly drew a connection between his new risk-based approach to financial regulation and the success of Ireland as a financial capital: "The strategy I have outlined today will in my view add to the attractions of Ireland as a financial centre by establishing a reputation for strong regulation based on a rigorous assessment of risk."
On later occasions Elderfield talked about how "changes in regulatory standards" in Ireland would "provide opportunities for the IFSC".
Again, the sentiment hews closely to statements by leading industry figures. Neil Ward, chairman of the Federation of International Banks in Ireland (FIBI) and the managing director of Bank of Montreal Ireland, an IFSC bank, touched on the issue in his address to the group's annual lunch.
"I would go as far as to say that much of the new regulation is welcomed by our industry," he said. "The correct amount of regulation will increase the attractiveness and competitiveness of Ireland... and it can be a brand-enhancing opportunity for the IFSC."
Elderfield has hardly put a foot wrong so far. But it will not be easy to walk the line between keeping finance honest and making sure not to smother any economic recovery the IFSC can offer.