Tuesday 21 November 2017

Half-truths and chaos lay behind country's demise

It is clear from Mr Cowen's account, that the basis upon which the decision was taken was deeply flawed
It is clear from Mr Cowen's account, that the basis upon which the decision was taken was deeply flawed
Daniel McConnell

Daniel McConnell

Six years, eight months and one week on from the infamous night of the bank guarantee, Brian Cowen the former Taoiseach came to account for his actions on that night.

Facing his former political rivals and colleagues, Mr Cowen set out in considerable detail his motivations, thought processes and reasoning for introducing the guarantee.

It is clear from his view - the most central of all views, as he was the ranking politician on the night - that the decision to give such an open-ended guarantee was a mistake of horrific proportions.

It is clear from Mr Cowen's account, that the basis upon which the decision was taken was deeply flawed.

Specifically, he revealed that the Financial Regulator Pat Neary told the key meeting in Government Buildings that night that all the banks were solvent.

Separate advice from highly paid consultants Merrill Lynch suggested that while the banks were experiencing short-term cash-flow problems, they were profitable and well-capitalised.

That information was clearly wrong.

Mr Cowen admitted in his testimony that at no stage did the scale of the losses that were ultimately realised feature in anyone's thinking on that night.

Secondly, we know that the banks themselves were incredibly economical with the truth in their presentations to Government when they came cap in hand seeking a guarantee.

Things were bad and needed immediate action; but no one thought the banks would need €64bn to be rescued.

Had Mr Cowen and his officials known what was at stake, different decisions would have been taken.

Thirdly, Mr Cowen confirmed that he spoke with consultant Alan Gray, an economist he trusted, for his advice as to whether a guarantee was a good idea.

Mr Cowen had appointed

Mr Gray to the board of the Central Bank. But, he also confirmed Mr Gray failed to tell him, or did not tell him, that Anglo Irish Bank chairman Sean FitzPatrick and CEO David Drumm had called unannounced to his office earlier in the day to seek a rescue for their bust institution.

Stepping back from Mr Cowen's evidence and taken with the sum total of what has emerged already, it is a damning indictment of how this country was run.

Light-touch regulation, which meant no regulation, was the order of the day and the State institutions charged with maintaining the system simply fell down on the job.

Their failure has cost this country dearly.

Mr Cowen also went into some detail about his stewardship of the economy in the run-up to the November 2010 Troika bailout and had a lash at those dark European sources who briefed against Ireland.

He had several cuts at the "unacceptable" behaviour of those who sought to force Ireland into a bailout programme, and he gave voice as to who he thought were responsible.

He cited ECB sources and others from the European institutions and he said he thought such behaviour was deeply disrespectful to the Irish people.

Mr Cowen appeared to suggest that the actions of others were the cause of Ireland going into the bailout, rather than the highly distressed place the economy and our banking system were in.

But time and time again, Cowen's evidence had the effect of revealing how poorly equipped the State was to deal with the emerging crisis, to contain it when it arrived, or to stave off the international vultures who eventually got their claws in.

His evidence was a litany of bad choice after bad choice made between 2008 and 2011. No matter how well intentioned Mr Cowen and his finance minister Brian Lenihan were, he cannot escape the disastrous legacy he has to live with.

Irish Independent

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