Monday 24 October 2016

Ireland 'pushed very hard' into bailout by external forces, Cardiff tells inquiry


A PROCESSION of leading bankers and business people lobbied the Government for a bank guarantee in the months running up to the decision, the Banking Inquiry has heard.

The names include Anglo Irish Bank boss Sean FitzPatrick, businessman Dermot Desmond, Irish Life and Permanent chairman Gillian Bowler, former Finance Minister Charlie McCreevy and Bank of Ireland chief Brian Goggin.

Former Secretary General of the Department of Finance Kevin Cardiff said at the end of April 2008 Mr FitzPatrick had suggested some sort of guarantee to the then Central Bank Governor John Hurley.

A few days later Mr Cardiff had in his notebook an approach was made by someone with the initials DD but he could not recall who it was. On May 3 Mr McCreevy suggested a form of political guarantee.

In July there was an approach from Davy Stockbrokers, Denis Desmond, Gillian Bowler and Brian Goggin.

Mr Cardiff also said that ECB head Jean Claude Trichet had told Mr Hurley that Ireland had to save its banks.

The ECB and Mr Trichet did "a good deal more than simply give advice" he stressed.

Mr Cardiff said he and Finance Minister Brian Lenihan had argued against a blanket guarantee on the night of September 29, 2008, but Mr Lenihan had later changed his mind.

He said that Ireland was "pushed very hard" into the 2010 bailout by external forces. Some of the pressure was direct but there was also misinformation and media leaks which accelerated market pressures.

Of the guarantee, he said it was the option least likely to lead to disaster.

Mr Cardiff said he did not think Mr Cowen acted under any special influence of Anglo Irish Bank.

"I believe he was influenced by the information given to him," he said.

The burning of bondholders at the time was effectively stopped by Mr Trichet, ex-Finance Department Secretary General John Moran said.


He described how in March 2011, Finance Minister Michael Noonan was preparing to go into the Dail and make an announcement about restructuring of the system.

There were negotiations by phone with the ECB right up to the minute the speech was due.

Mr Moran told the inquiry that the "sad reality" was that "an acute lack of fiscal capacity at Government level removed flexibility in easing the impact" of the property price collapse.

Even now "the reality of the situation is that we are spending more money than we are paying into the system. We are still putting debt on future generations for us to live", he said.

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