Thursday 29 September 2016

Lenihan was determined to the last, former AG tells inquiry

Clodagh Sheehy

Published 17/07/2015 | 02:30

Former AG Paul Gallagher at Leinster House yesterday
Former AG Paul Gallagher at Leinster House yesterday

The determination of the late Finance Minister Brian Lenihan to push through legislation for the bank bailout, despite being seriously ill with cancer, has been praised by former Attorney General Paul Gallagher.

  • Go To

Mr Gallagher described to the Banking Inquiry a meeting with Mr Lenihan in the Merrion Hotel on December 23, 2010. He said the minister's only concern was to put in place the necessary legislation before the Government fell.

"Here was a man under stress and the clear knowledge of what the future had for him and there was only one thing that concerned him," he added.

Mr Lenihan lost his battle with cancer the following June.

Mr Gallagher, who was in Government Buildings on the night of the bank guarantee, described his abiding memory of Ireland's isolation throughout the whole financial crisis.

Ireland "truly stood alone" he said. The country "had the sympathy and goodwill of other countries but ultimately had to rely on its own resources to find solutions to the crisis".

He also told the Banking Inquiry that the Government had initially considered a blanket bank guarantee for six months in discussions on September 29, 2008 but extended this to two years after lobbying by AIB and Bank of lreland.

The banks had "made clear their belief that anything short of a two-year guarantee would not have the desired effect".

Mr Gallagher said the situation on the night of the guarantee was "extremely grave".

AIB and Bank of Ireland wanted a guarantee that night and suggested Anglo Irish Bank and Irish Nationwide Building Society be nationalised.

They were concerned that extending the guarantee to weaker banks would undermine the credibility of the guarantee.

The Government, however, was concerned that the markets would not sufficiently differentiate between the banks.

Meanwhile, Eugene McCague of legal firm Arthur Cox told the inquiry that Taoiseach Brian Cowen asked the Central Bank Governor John Hurley "on a number of occasions" that night if Anglo was solvent.

Mr Hurley, he added, had said the bank was solvent, the issue was one of liquidity. Financial Regulator Patrick Neary gave the same view.

The legal firm was engaged by the Department of Finance five days before the guarantee and was shocked by their initial briefing.

His colleague Mr McCague said their main task was to prepare legislation for a possible nationalisation of Irish Nationwide and Anglo Irish Bank or to increase liquidity across the whole banking sector.

Irish Independent

Read More

Promoted articles

Editors Choice

Also in Business