Guarantee the 'only decision at the time'

His difficulty with the scheme was that it needed to be a temporary measure.

In reply to questions from Michael McGrath TD, Mr McWilliams (inset) said he had told Finance Minister Brian Lenihan at the time that the guarantee should have been made conditional and not open-ended so they did not end up having to pay off risk capital.

At no stage, he added, did he suggest to the minister that it should include subordinated debt.

Mr McWilliams described how he had met the minister for the first time on September 6, 2008, and then at his own home 11 days later.

Over a period of two weeks they also had a dozen phone calls but after October 4, 2008 he had never seen him again, and "I found myself back on the outside", he said.

Mr Lenihan had told him he was getting different financial assessments from everyone, and Mr McWilliams had advised the minister he needed to do something to buy himself time to get the facts.

The economist suggested to Mr Lenihan that he introduce a temporary guarantee of perhaps two years to stem the run on deposits.

He told the inquiry the banking crisis and property bubble were both "predictable and absolutely preventable".

Mr McWilliams said many ordinary people could see what was happening and they were "forced to play a game where the dice is loaded against them".

He did not believe the country was taken by surprise and described the housing market at the time as a "scam funded by overlending".

The bank guarantee and the bailout were "all the consequences of pathetic policy in 2008", he added.