THE National Treasury Management Agency was once seen as one of the State's most successful innovations.
Delegations came from far and wide to learn how the agency had cut the cost of borrowing -- by moving away from a civil servant mentality to an unusual hybrid that resembled something between a central bank and a merchant bank.
It was a great achievement and much of the credit belongs to Michael Somers, the sometimes spiky and sometimes avuncular chief executive who ran the organisation from its foundation until last year.
It has been clear for som time that the NTMA is not the organisation it once was. A victim of a serious case of mission creep, the NTMA has been burdened with all sorts of unrelated tasks, such as the National Pension Reserve Fund, fighting court cases on behalf of the State against the parents of children injured in state care and, most recently, the National Asset Management Agency.
All these unrelated tasks have distracted the NTMA at a time when the country's independence was in jeopardy because of our inability to raise funds on the money markets. Our failure to raise those funds ultimately led to €85bn bailout and the IMF. The decision to force the NTMA to lend to Anglo Irish against the advice and wishes of Dr Somers must be seen in this context.
It goes without saying that Finance Minister Brian Lenihan had the legal right to force the NTMA to lend to the banks. The question is, was he right?
Mr Lenihan is a lawyer and he argued last night that he was entitled to do what he did. The tragedy for this country is that while it may have been legally permissible, it was wrong on several levels.
It was wrong because Anglo was, even then, a failed bank. Anglo was finished and Dr Somers was not alone in believing that; most of the bank's long-term US shareholders had also sold their shares to financial ingenues such as Sean Quinn.
While it is fair to say Mr Lenihan was a new minister when he mistakenly ordered the NTMA to ignore its commercial mandate and secretly prop up failing banks, it is wrong to say he should be forgiven. This Government has repeatedly claimed it did not receive any warnings about the bust. The truth is that it did get many warnings from unimpeachable sources, but failed to listen to them.
WE may never know why Mr Lenihan and Mr Cowen made the decisions they made, but it is now evident that they were wrong decisions, and that wise old heads were warning against these mistakes.
Many errors have followed and there is no sign the Government has learnt much from these costly mistakes or regrets them. We have instead been treated to fresh legislation which makes Mr Lenihan the most powerful finance minister in the Western World with extraordinary powers to muzzle the press and merge banks at a whim.
The sorry truth is that Mr Lenihan should not have such powers. He ripped the heart out of the NTMA by forcing it to ignore its commercial mandate and insisting it "offer an important signal to the banks of support from public authorities".
The NTMA is not meant to be a plaything of ministers. That its once-clear mandate and wonderful reputation have been confused and muddied is this Government's fault, and taxpayers must now pay a high price for this costly mistake.