The Irish Independent reports that prosecutions will follow the investigations into the activities at Anglo Irish Bank, Finance Minister Brian Lenihan has predicted.

But the taxpayer is still going to have to pay to clean up the nationalised bank because it is "too big to fail". Mr Lenihan said half the bank's loans would go into the National Asset Management Agency and the rest would have to be worked through by new management.

The minister's comments indicated the Government would proceed with further recapitalisation of the bank. "The great difficulty with Anglo -- and I am asked this all the time -- is why doesn't the State let this institution go to the wall? The answer is that this institution was too big to fail in terms of Ireland. Our problem with Anglo is that its balance sheet was very large. It was probably nearly half of our annual national wealth and clearly if you let an institution like that fail, the ripple-effects to the credit of Ireland and the credit of the banking system would be enormous," he told the 'Sunday Independent'.

"To de-risk an institution like that can't be done immediately, it takes time and that is what is under way," he said.

Mr Lenihan became the latest cabinet member to predict that bankers would come before the courts.

There are three investigations ongoing into the banking scandals by the Director of Corporate Enforcement, the Garda Fraud Office and the Financial Regulator. The conclusions from these inquiries will then be passed to the Director of Public Prosecutions to decide if any charges can be pressed.

Inquiry

Mr Lenihan said: "I believe there will be prosecutions in relation to what happened in Anglo Irish Bank. But it is not a matter for me. It is a belief of mine, but it is not a matter for me to decide; that will be a matter for the Director of Public Prosecutions.

"However, I am satisfied that the authorities are engaged in a wide-ranging and productive inquiry on these matters."

The minister pointed out he previously had views on the length of time the investigation was taking, but he was "satisfied that investigations are now proceeding at a good pace".

Communications Minister Eamon Ryan predicted late last year that bankers would face the courts in 2010 over their "malpractice" and "improper conduct".

The Irish Independent also reports that expensive flights, five-star hotels, top-notch restaurants and fine wines.

It was all in a day's work if you were a board member or a leading executive at the Dublin Docklands Development Authority (DDDA) at the height of the Celtic Tiger.

For years the DDDA saw nothing wrong with this and up until very recently it had been in a state of denial about its junketeering.

Why would anyone shout stop when the authority had managed to change the face of Dublin's docklands, and attract an estimated €7bn of public and private investment in the area since 1997?

Only last December, when the Irish Independent first tackled the DDDA over travel expenses, officials there were slow to accept that high travel costs had been an issue.

The official line from the DDDA was that the trips were necessary to help the authority study similar large-scale projects in action abroad.

That might have been the case, but it still didn't justify €3,000-plus flights and €580-a-night hotel stays.

Changed

Just three months on, that tune has changed significantly with an acknowledgment that the party is over and that a post-mortem is in full swing.

The authority, which is now under the no-nonsense chairmanship of Prof Niamh Brennan, wife of former justice minister Michael McDowell, says it is taking "radical action" to return itself to a sound financial position and restore its reputation.

The commercial state body has now banned expensive travel. After racking up accumulated losses of €213m, its budgets no longer provide for such trips.

Prof Brennan is faced with no small task in trying to restore public confidence in the DDDA and the travel issue may be the least of the authority's worries.

As has been seen before with FAS, profligate spending on foreign junkets can often be symptomatic of a wider malaise within an organisation.

High-profile legal disputes, including a spat involving developers Liam Carroll and Sean Dunne, have dogged the authority in recent years. Legal bills hit €5.5m in 2008 alone.

There is the prospect of further costly litigation this year and also a potentially massive bill if the architects of the original U2 tower plan win an arbitration case.

But the full extent of the troubles may not be revealed until corporate governance reports on planning and finance at the authority are published by Environment Minister John Gormley.

He has insisted he will publish the reports once they have been considered by the Attorney General.

Findings in relation to the disastrous Irish Glass Bottle site deal in 2006 are thought to be the biggest potential political hand grenade in the reports.

Endorsed

The DDDA's taking of a 26pc stake in the property was endorsed by Taoiseach Brian Cowen, who was then Finance Minister, and the then environment minister, Dick Roche.

The €412m purchase was carried out in conjunction with developer Bernard McNamara and businessman Derek Quinlan and was primarily funded with a €293m loan from Anglo Irish Bank and AIB.

The site is now worth just €50m. That former board members Sean FitzPatrick and Lar Bradshaw helped approve the DDDA's involvement while their bank was part-funding the deal has raised many questions.

The Irish Times reports that union leaders meet today to consider escalating the campaign against public sector pay cuts. The Irish Congress of Trade Unions (Ictu) meeting takes place against the backdrop of comments by Minister for Finance Brian Lenihan that Government politicians are being threatened by some unions involved in the dispute.

Rolling two-hour stoppages across the health sector and other parts of the public service as well as the temporary closure of offices are among the options to be considered today by Ictu’s public services committee.

Mr Lenihan said there was a suggestion that TDs and councillors who support the Government “would in some way be blacklisted by local authority staff”.

“There has been an element, and I have to say it hasn’t been right across the service, but there has been an element within the Civil Service of non co-operation with the system, in terms of answering telephone calls and in terms of facilitating deputies of all parties,” he said.

“In the last week I have noticed a more serious threat emerging where councillors and deputies of parties who support the Government are being threatened by some local government unions.

“These are serious developments. The further this difficulty escalates, the less likely that anyone will gain from it,” he said.

“It is a fact that the State is not in a position to pay the salaries as they were last year. The decisions have been made by parliament and we have made it very clear to the union side that there is no scope for restoring the reductions that have already been made."

Asked what kind of “threats” he was referring to, the Minister said: “There was a suggestion that deputies and councillors who support the Government would in some way be blacklisted by local authority staff.”

Mr Lenihan’s comments, made to the Sunday Independent were confirmed by his department yesterday.

Last night Ictu said it was unaware of any direct threats by unions to blacklist individual councillors or TDs from parties which supported the pay cuts in the public sector.

An Ictu spokesman said: “I have heard nothing to do with any threats, I don’t believe that is the case.”

Paddy Healy, chairman of the National Public Services Alliance, an informal group of public service union activists, said last night: “We are calling on people not to vote for any TD in the next election who has voted for cuts in public service pay and in social welfare. They can remove themselves from the blacklist by voting to reverse the cuts.”

Last night, the Government again ruled out any reversal of the pay reductions. Minister of State John Curran said negotiations with the public service unions could only take place “on the clear understanding of the limited funding available”.

Yesterday the 24/7 Frontline Alliance, which represents public sector staff including groups such as gardaí and psychiatric nurses who are not affiliated to Ictu, said that it fully supported escalating the campaign.

The Irish Times also reports that the ESB has set up a new venture in the UK to develop, construct and operate small onshore wind projects.

Called Airvolution Energy, it will focus on sub-10 megawatt (MW) projects – generally operations with three or fewer turbines.

The venture is being funded by ESB Novus Modus, a clean-tech and renewable energy fund set up by the semi-State company that plans to invest €200 million in projects in Ireland, the UK and northwest Europe. It is expected to provide €5-15 million in funding to the UK venture.

Airvolution Energy has signed an exclusive arrangement with Savills, which has been charged with identifying brown-field sites and managing the full planning permission process. PEP, a specialist in wind energy, will provide the ESB spin-off with development and operational services.

The venture is being led by Kevin McNamara, a former managing director at ESB International, and will operate across Britain.

Bernard Byrne, chairman of ESB Novus Modus, said Airvolution Energy would seek to become a major player in the niche renewable sector in Britain.

Commenting on the development, Philip Gready, director of Savills Energy, said: “It will kick-start this sector, and allow landlords to develop the full potential of their wind resources with a trusted partner.”

The Irish Examiner reports that the Irish Management Institute and UCC are understood to have signed a draft completion memorandum that should see the institute fully merged with the Cork university in the coming months.

Both sides entered talks last year with a view to making the institute a fully integrated part of UCC.

Neither side was prepared to say anything when contacted recently about the ongoing negotiations or about the state of the IMI’s finances.

Tom McCarthy, head of the IMI, said a lot of issues had still to be resolved before he could comment. Mr McCarthy is a graduate of UCC and lectured there in the early part of his career.

It is understood a new executive training campus will be set up as a full service campus after the merger, offering a wide range of courses.

London’s Henley Centre is one possible model under consideration for the new training body.

Henley is a global leader in executive education and is Britain’s oldest business school, with over 60 years experience.

The recession has hit the IMI and it has lost out significantly in the number of short-term courses in particular being taken at present.

As a result of the downturn in its core business the institute moved from making a profit of €500,000 on its courses in 2007 to a loss of €1.3 million the following year.

Unconfirmed reports suggest that following a more difficult 2009, that loss could have doubled.

Despite the financial difficulties facing the group, it is expected the merger with UCC will be signed off on before the end of the first quarter of 2010.

The Sandyford, Co Dublin-based institute is aiming to improve its rankings in executive education, which includes a Masters of Business Administration (MBA) programme and several degrees and diplomas in management, organisational behaviour and leadership.

It also offers training programmes geared specifically to individual needs.

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Eurozone eyes IMF-style fund - - Germany has given crucial backing for a proposal to create a "European Monetary Fund" that would act like the International Monetary Fund (IMF) in providing support for economically troubled member countries of the Eurozone.

First step towards more integrated eurozone

Reykjavik to seek fresh debt agreement - - Iceland's finance minister said on Sunday the government wanted to reach a new agreement on repaying "Icesave" debts before upcoming elections in the UK and the Netherlands.

The UK is expected to hold elections in early May and the Dutch are due to go to the polls on June 9th.

"It is not a matter of days or a few weeks but it's important that we do this as swiftly as possible," Finance Minister Steingrimur Sigfusson told a news conference after voters overwhelmingly rejected in a referendum an old Icesave agreement.

Call for new technology drive to spur growth- - the UK government has commissioned tech entrepreneur Hermann Hauser to analyse what other countries are doing in the technology area to see what can be learned. That should inform some of the Budget decisions.

India races to match China’s double digit - - India's Finance Minister Pranab Mukherjee says double-digit annual economic growth is feasible. Mukherjee, however, remains concerned over high food inflation and the ambiguous nature of recovery in exports due to the uncertainty prevailing in the developed economies.  “...I feel the fundamentals of the economy are strong.  The positives from our recent performance outweigh the negatives, so that one can hope to see the economy breaking the double-digit growth barrier in the very near future, which is essential for reducing poverty in the country,” Mukherjee said in his address to the 82nd AGM of Federation of Indian Chambers of Commerce and Industry (FICCI).  On a roll-back of the emergency measures to prop up the economy, the Minister said, “I am committed to fiscal consolidation in the interest of the economy’s capacity to sustain growth in the medium to long term.  But it can be fully effected when the recovery in private demand—both consumption and investment—is sufficiently robust.”

Investments have been the key growth driver in the past and will continue to be for at least another 10 years, Mukherjee added.

Software helps hackers empty corporate accounts- - Losses among US banks and their customers from computer intrusions and falsified electronic transfers were about $120m in the third quarter, more than triple the level of two years ago.

The New York Times reports that in an effort to end the foreclosure crisis, the Obama administration has been trying to keep defaulting owners in their homes. Now it will take a new approach: paying some of them to leave.

This latest program, which will allow owners to sell for less than they owe and will give them a little cash to speed them on their way, is one of the administration’s most aggressive attempts to grapple with a problem that has defied solutions.

More than five million households are behind on their mortgages and risk foreclosure. The government’s $75 billion mortgage modification plan has helped only a small slice of them. Consumer advocates, economists and even some banking industry representatives say much more needs to be done.

For the administration, there is also the concern that millions of foreclosures could delay or even reverse the economy’s tentative recovery — the last thing it wants in an election year.

Taking effect on April 5, the program could encourage hundreds of thousands of delinquent borrowers who have not been rescued by the loan modification program to shed their houses through a process known as a short sale, in which property is sold for less than the balance of the mortgage. Lenders will be compelled to accept that arrangement, forgiving the difference between the market price of the property and what they are owed.

“We want to streamline and standardize the short sale process to make it much easier on the borrower and much easier on the lender,” said Seth Wheeler, a Treasury senior adviser.

The problem is highlighted by a routine case in Phoenix. Chris Paul, a real estate agent, has a house he is trying to sell on behalf of its owner, who owes $150,000. Mr. Paul has an offer for $48,000, but the bank holding the mortgage says it wants at least $90,000. The frustrated owner is now contemplating foreclosure.

To bring the various parties to the table — the homeowner, the lender that services the loan, the investor that owns the loan, the bank that owns the second mortgage on the property — the government intends to spread its cash around.

Under the new program, the servicing bank, as with all modifications, will get $1,000. Another $1,000 can go toward a second loan, if there is one. And for the first time the government would give money to the distressed homeowners themselves. They will get $1,500 in “relocation assistance.”

Should the incentives prove successful, the short sales program could have multiple benefits. For the investment pools that own many home loans, there is the prospect of getting more money with a sale than with a foreclosure.

For the borrowers, there is the likelihood of suffering less damage to credit ratings. And as part of the transaction, they will get the lender’s assurance that they will not later be sued for an unpaid mortgage balance.

For communities, the plan will mean fewer empty foreclosed houses waiting to be sold by banks. By some estimates, as many as half of all foreclosed properties are ransacked by either the former owners or vandals, which depresses the value of the property further and pulls down the value of neighboring homes.

If short sales are about to have their moment, it has been a long time coming. At the beginning of the foreclosure crisis, lenders shunned short sales. They were not equipped to deal with the labor-intensive process and were suspicious of it.

The lenders’ thinking, said the economist Thomas Lawler, went like this: “I lend someone $200,000 to buy a house. Then he says, ‘Look, I have someone willing to pay $150,000 for it; otherwise I think I’m going to default.’ Do I really believe the borrower can’t pay it back? And is $150,000 a reasonable offer for the property?”

Short sales are “tailor-made for fraud,” said Mr. Lawler, a former executive at the mortgage finance company Fannie Mae.

Last year, short sales started to increase, although they remain relatively uncommon. Fannie Mae said preforeclosure deals on loans in its portfolio more than tripled in 2009, to 36,968. But real estate agents say many lenders still seem to disapprove of short sales.

Under the new federal program, a lender will use real estate agents to determine the value of a home and thus the minimum to accept. This figure will not be shared with the owner, but if an offer comes in that is equal to or higher than this amount, the lender must take it.

Mr. Paul, the Phoenix agent, was skeptical. “In a perfect world, this would work,” he said. “But because estimates of value are inherently subjective, it won’t. The banks don’t want to sell at a discount.”

There are myriad other potential conflicts over short sales that may not be solved by the program, which was announced on Nov. 30 but whose details are still being fine-tuned. Many would-be short sellers have second and even third mortgages on their houses. Banks that own these loans are in a position to block any sale unless they get a piece of the deal.

“You have one loan, it’s no sweat to get a short sale,” said Howard Chase, a Miami Beach agent who says he does around 20 short sales a month. “But the second mortgage often is the obstacle.”

Major lenders seem to be taking a cautious approach to the new initiative. In many cases, big banks do not actually own the mortgages; they simply administer them and collect payments. J. K. Huey, a Wells Fargo vice president, said a short sale, like a loan modification, would have to meet the requirements of the investor who owns the loan.

“This is not an opportunity for the customer to just walk away,” Ms. Huey said. “If someone doesn’t come to us saying, ‘I’ve done everything I can, I used all my savings, I borrowed money and, by the way, I’m losing my job and moving to another city, and have all the documentation,’ we’re not going to do a short sale.”

But even if lenders want to treat short sales as a last resort for desperate borrowers, in reality the standards seem to be looser.

Sree Reddy, a lawyer and commercial real estate investor who lives in Miami Beach, bought a one-bedroom condominium in 2005, spent about $30,000 on improvements and ended up owing $540,000. Three years later, the value had fallen by 40 percent.

Mr. Reddy wanted to get out from under his crushing monthly payments. He lost a lot of money in the crash but was not in default. Nevertheless, his bank let him sell the place for $360,000 last summer.

“A short sale provides peace of mind,” said Mr. Reddy, 32. “If you’re in foreclosure, you don’t know when they’re ultimately going to take the place away from you.”

Mr. Reddy still lives in the apartment complex where he bought that condo, but is now a renter paying about half of his old mortgage payment. Another benefit, he said: “The place I’m in now is nicer and a little bigger.”

The NYT also reports that to fill three seats on the Federal Reserve’s board of governors, the Obama administration is balancing seemingly contrary needs.

It could use the expertise of an outsider with Main Street credentials, but savvy in bank regulation; a veteran of complex financial deals, but not associated with the bailed-out banks of Wall Street; and an esteemed economist, but one whose vision extends beyond fighting inflation.

The formerly obscure Fed board has, if not quite the visibility of the Supreme Court, the burden of being under greater scrutiny than at any time in nearly 30 years.

As they vet potential candidates, Lawrence H. Summers, director of the National Economic Council, and Timothy F. Geithner, the Treasury secretary, are balancing their own desires with political pressures from within and outside the White House.

Among the potential unconventional nominees whose names have been floated in recent days are Martin D. Eakes, a North Carolina lawyer who helped found Self-Help, a community development fund for low-income borrowers; Peter A. Diamond, an M.I.T. economist and an authority on Social Security and pensions; Alan B. Krueger, a Treasury economist on leave from Princeton, who has studied labor, inequality and terrorism; and Jared Bernstein, an adviser to Vice President Joseph R. Biden Jr. and a longtime advocate of liberal economic views.

According to several people who have been briefed on the search process, Mr. Summers, a former Treasury secretary and Harvard president, and Mr. Geithner, a former president of the Federal Reserve Bank of New York, both favor economists with impeccable academic credentials, but they also recognize the need for candidates with regulatory experience and community ties.

Janet L. Yellen, who was a Fed governor and chairwoman of the Council of Economic Advisers in the Clinton administration, has been mentioned as a front-runner to succeed Donald L. Kohn, the departing vice chairman.

But the people briefed on the process said it was not clear that Ms. Yellen, now president of the Federal Reserve Bank of San Francisco, would want to return to Washington. The White House might have to do some arm-twisting to get her; as vice chairwoman she would make $179,700, less than half her current pay.

Another potential candidate for vice chairman would be Benjamin M. Friedman, a Harvard political economist.

When Mr. Geithner held a meeting last month with leaders of labor, civil rights and consumer groups to discuss overhauling financial regulation, he found the conversation steering to the Fed, according to several participants.

Advocates called on Mr. Geithner to appoint governors who could make the Fed more representative and accountable. Diversity is likely to be another consideration. Of the 87 governors since 1914, there have been seven women and three African-Americans.

“It would really be helpful if they had knowledge of the real economy,” said William W. Sherrill, a former Fed governor who teaches entrepreneurship in the Bauer College of Business at the University of Houston. “All the attention lately has been on rescuing the financial sector from ruin, but the inability to move the stimulus over to the real economy — and most directly, small businesses — has been the problem.”

Several banking executives, who have been supporters of Mr. Obama, have been cited as possible nominees: Paul Calello of Credit Suisse, Robert Wolf of UBS and Steven G. Thieke, a veteran of the New York Fed who retired a decade ago from JPMorgan Chase. All have the advantage of not having worked recently at the financial institutions that were at the center of the credit crisis and were bailed out by the Treasury and the Fed, though their ties to the banks could still be problematic.

But speculation that the White House might turn to nominees not too closely tied to Wall Street or Washington was enhanced after Christina D. Romer, the chairwoman of the White House Council of Economic Advisers, told several news organizations on Friday that she did not intend or expect to be considered.

Ms. Romer is an authority on the Great Depression, like the Fed chairman, Ben S. Bernanke, and has closely studied the Federal Open Market Committee, the Fed’s policy-making arm. Her main scholarly collaborator has been her husband, David H. Romer, an economist at the University of California, Berkeley, who has himself been mentioned as a possible nominee.

“There’s obviously a process under way, as there are with any positions,” Ms. Romer told Politico. “But I certainly won’t be one of them.”

The people briefed on the talks spoke of several economists with ties to Mr. Summers and Mr. Geithner: Edwin M. Truman of the Peterson Institute for International Economics, a veteran of the Fed and the Treasury; the Harvard professors Jeffrey A. Frankel, Jeremy C. Stein and David S. Scharfstein; and David A. Lipton, a former Treasury official who is now at the National Security Council.

Other names that have been mentioned include Laurence M. Ball, an economist at Johns Hopkins; Austan Goolsbee, a member of the Council of Economic Advisers; and Jason Furman, a deputy to Mr. Summers.

All of the potential nominees mentioned in this article either declined to comment, citing the confidentiality of the process, or did not respond to requests for comment.

For their part, consumer advocates said they were closely watching the selection process.

“I hope they will give serious consideration to adding people who understand and care about the financial needs of consumers, and who know how to balance access and protection,” said Jennifer Tescher, director of the Center for Financial Services Innovation, and a member of the Fed’s Consumer Advisory Council.