'Ireland stupid to guarantee banks' - Timothy Geithner
US President Obama's most senior economic official during the global financial crisis has claimed Ireland was "stupid" to guarantee the banks.
Former US Treasury Secretary Timothy Geithner, who stepped down last year, said the country couldn't afford the 2008 blanket guarantee, which lumped €64bn of bank losses on taxpayers.
"Ireland, most people view in retrospect, was stupid to guarantee all their banks. They couldn't afford it," the former US Treasury Secretary said.
"They were eight times the size of their economy. Now it's easy for us to say that."
The comments are from raw transcripts of interviews that Mr Geithner had with assistants preparing his recent book, which recalled his time in the top US financial job during the global economic crisis.
He also wondered whether Europe should have stepped in and guaranteed the banks as it could afford it.
"The Irish couldn't," he said.
In Mr Geithner's book 'Stress Test: Reflections on Financial Crises', he recalls that in 2010, just prior to Ireland's bailout by the International Monetary Fund and Europe, he called for no losses to be imposed on senior bondholders here.
It was around that time that then European Central Bank President Jean-Claude Trichet wrote to the late Finance Minister Brian Lenihan, threatening to withdraw emergency funding for Ireland's banks unless the country signed up to an international bailout.
The Geithner transcripts, which were obtained and reproduced by the Financial Times, also highlight other comments made by Mr Geithner, some quite blunt, that were left out of his book.
He dismissively described former European Commission Economics Commissioner Olli Rehn as the "economic guy on the commission, who is always in the papers about this kind of stuff, who doesn't have much authority."
But he said he was a "force of reason".
And he also admitted that German Chancellor Angela Merkel would never meet him.
"Merkel would never speak to me. I never called Merkel directly ... she would never - and I went to Germany a couple of times.
"She would never see me," he said.
The vexed question of whether Ireland was right or wrong to enter into the guarantee will likely be debated by the banking inquiry.
Mr Trichet is facing mounting calls for him or an ECB representative to appear before the Irish banking inquiry, after the letters between himself and Mr Lenihan were made public last week.
A number of senior Government ministers have called on leading European figures involved in the bailout to give evidence.
Public Expenditure and Reform Minister Brendan Howlin said that while the economic crisis here had been sparked by reckless domestic policies, the ECB had restricted Irish efforts to tackle the situation by not allowing senior bondholders at some banks to take losses.