Harney: We should have asked harder questions
The Government should have dug deeper, asked harder questions, and taken unpopular decisions to stop the financial crash, former Tánaiste Mary Harney has said.
Ms Harney has blamed an enormous explosion of cheap credit, undue confidence in the regulatory regime and allowing public spending to grow too quickly as the main reasons for the financial crash.
She told the Banking Inquiry, while she was proud of economic and social achievements during her period in office, "those governments also made mistakes which I certainly regret".
She identified three principal errors, the first of which was the "enormous explosion of cheap credit" as Ireland entered the euro.
Secondly, more proactive monitoring could have helped raise awareness of the risks.
"I believe that, as a Government, we had undue confidence in the new financial regulatory regime and stood too far at arm's length when there were serious signals to be read in the economy. That was wrong."
Finally, public spending had been allowed to grow too quickly "on the back of unprecedented tax growth".
Spending was allowed to increase too rapidly as the economy overheated and the exchequer became over-dependent on construction.
"But no one in the political arena was calling for the kind of restraint that, in hindsight, we can now see could have eased the later pain."
The quality of Oireachtas oversight of banking and economic policy, she added, was very poor prior to the crisis.
"I may be wrong of course - but if meaningful and real oversight was being performed by the Oireachtas I was not aware of it and nor, I would suggest, was the general public."
Social Partnership also became all-embracing and "so, to an extent" undermined the role of the Oireachtas.
Ms Harney said, with hindsight, the bank guarantee was the correct thing to do at the time "especially given the knowledge we had then".
She remained to be convinced whether the nationalisation of Anglo then would have made much difference.
Former leader of the Green Party John Gormley said he believed the Government was misled by the banks and there must have been some individuals in banks who knew they were insolvent - but he had no hard evidence of this.
He described getting a phone call from former Finance Minister Brian Lenihan on the morning of September 30, 2008, who told Mr Gormley he was welcome to come to Government Buildings. Mr Gormley said he told the minister this would not be necessary "if we were going with the 'David McWilliams option'".
That option was a full bank guarantee - and Mr Lenihan confirmed that was what was being proposed.
"At the time, Minister Lenihan was a man who played his cards very close to his chest - I often found out what was going on in his mind from David McWilliams," said Mr Gormley.
In the weeks running up to the guarantee, he said: "I asked Mr Lenihan if there were contingency plans here? In snatched conversations in the corridor, he told me that matters were 'in hand'."