It doesn't really need a Tynwald Select Committee to inquire into the reasons for the collapse of the Kaupthing bank. There was no member of staff shouting through the closed door on 8 October 2008: "we have stopped trading but no one knows why".
The bank had its licence withdrawn by the Financial Supervision Commission, the same body that had backed the transfer of over half of the bank's assets to Kaupthing UK which went into receivership in October 2008. Having lost these assets Kaupthing IoM ceased to have liquidity to continue trading.
The IoM government has already announced that neither the directors nor the FSC did anything wrong. Then why have not the directors made a statement to the depositors who lost all when the bank went bust? And why did the FSC seek & obtain for itself immunity from prosecution?
The directors were able to transfer the assets because the IoM banking regulations permitted such a transfer to a bank within the same banking group. In normal & stable circumstances this could have been determined to be an appropriate decision. However, neither the circumstances nor the reasons were normal.
The money had been upstreamed to the parent bank Kaupthing hf (Iceland) which both the FSC & the UK Financial Services Authority knew for some time was a bank in trouble. For this reason it was decided that the money would be more secure if transferred to Kaupthing UK.
Common sense alone would have told the directors & the FSC that to put over half the assets entirely unprotected into a sister bank of a failing parent was asking for trouble. There was an umbilical cord between the two and if the 'mother' bank went down it would invevitably take down the offspring. It did. Every Kaupthing bank in Europe went bellyup.
So whilst the transfer of the assets were not made contrary to the IoM banking regulations, the decision to do what was done was clearly a failure of the exercise of due diligence required in banking practice to ensure that this was the right decision having regard not only to the specific context of the looming Kaupthing hf crisis, but also to the context of the interntional financial crisis that had already errupted.
It will not be sufficient for the Select Committee to simply pronounce: "there was no regulatory failure". The directors made a decision, backed by the FSC, to transfer the assets to KSFUK and the committee must decide whether that decision was one made with due dilligence having regard to the context in which it was made.