If the Irish banking system had twice the buffers it actually had in place the financial crisis could have been averted, a former Secretary General of the Department of Finance has told the Banking Inquiry.
Mr Tom Considine, who held the post from 2002-2006 said during his period “the available safety margins seemed to be more than adequate”.
This had not proved to be the case and “I very much regret that I did not see that”.
Mr Considine described to the Inquiry how attempts had been made by Government to cool the property market in 2006.
He admitted that “clearly lower increases in day to day spending would have increased the buffers available to tackle” the financial crisis.
At the time, however, he added, there was a general belief that the economy was strong and the public finances healthy.
This put “intense pressure” on Government for additional spending and tax reliefs.
Mr Considine told the Committee that during that time “downside risks that could cause economic shocks were clearly acknowledged” and these were highlighted in the Minister Brian Cowen’s 2006 Budget and public statements.
The Budget had included a “range of measures restricting tax reliefs on property related projects.
“Those measures were designed to cool the property market without themselves causing the market to crash”.
Mr Considine is the first of several senior officials from the Department of Finance, who had key roles during the financial crisis, to come before this section of the Inquiry.
The former Secretary General said that while Ireland complied with EU public finance rules, both the EU and the Minister had pointed to “medium term risks”
“In both cases these risks included possible developments in the Irish housing market and the international economy”, he added.
In response to questions from Deputy Joe Higgins he said “with the benefit of hindsight evaluations that were done didn’t suggest the outcome could be anything like what eventually happened.”