Wednesday 26 October 2016

'Night of guarantee' myth only partly debunked

Published 28/01/2016 | 02:30

Former Taoiseach Brian Cowen
Former Taoiseach Brian Cowen

The 'night of the guarantee' is something of a myth, according to the Banking Inquiry team.

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They argue that the concept of the State guaranteeing the banks was first raised in January 2008 - nine months before the panic button was pressed.

The report also suggests that former Taoiseach Brian Cowen was wrong when he told the inquiry: "We had one shot at it, or Ireland could have been set back 25 years."

In fact we now know that the Central Bank had put in place sufficient measures to ensure that all the banks, including Anglo, would have opened the next morning.

But that's where the trail goes cold.

On the surface, the committee appears to have established a clearer narrative of the events of September 29, 2008, but there are still so many unanswered questions.

The old saying goes that journalists write the first draft of history, but in reality that honour can often go to an anonymous press officer.

At 9.11pm on September 19, 2008, the assistant secretary in the Department of Finance William Beausang received an email from the Central Bank with a draft press release announcing a six-month bank guarantee on deposits and interbank lending.

"It appears to have been authored earlier in the evening in the Central Bank in advance of the commencement of the meeting in Government Buildings," he told the inquiry in written evidence.

Representatives of the two main banks, Bank of Ireland and AIB, didn't arrive at Government Buildings until 9.30pm. So it begs the question was the guarantee decided before the talks even began?

The report doesn't tell us whether, as former Central Bank governor John Honohan claimed, Brian Lenihan was overruled by the Taoiseach on the issue.

And perhaps the most glaring thing missing from the report is any analysis on whether the guarantee was the least worst option or a costly mistake.

At this stage we're unlikely to ever know the answer to that question.

Irish Independent

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