Sunday 22 October 2017

Colm McCarthy: Don't look back in anger but warnings were there

Alarm bells over the perils the Celtic Tiger would inevitably face were ringing as far back as 2000

IN THE DARK: Authors of a new book — ‘The Fall of the Celtic Tiger’ — argue that Brian Cowen and Brian Lenihan would have agreed to the bank guarantee even if they had known of the consequences
IN THE DARK: Authors of a new book — ‘The Fall of the Celtic Tiger’ — argue that Brian Cowen and Brian Lenihan would have agreed to the bank guarantee even if they had known of the consequences
Colm McCarthy

Colm McCarthy

On the night of September 29, 2008, ministers and officials gathered in Government Buildings to consider the crisis at Anglo Irish Bank. Their solution was the much-reviled bank guarantee, which has led to Exchequer costs totalling about 50 per cent of Ireland's annual national income.

Those willing to exonerate the decision-makers point to their ignorance of the true extent of insolvency in the Irish banking system. This is a reasonable point – if those who gathered in Merrion Street that night had been informed that every single bank was bust and that the bill for bank rescue would exceed €60bn, leading the State itself into insolvency, they would, on this line of argument, have followed a less costly course.

But they were assured by officials, including the Central Bank governor and the Financial Regulator, that the banks were sound and were experiencing no more than temporary problems of liquidity. The two main banks themselves believed this to be the case at the time.

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