Reckless lending “which none of us in our wildest dreams could have imagined” was how former Tanaiste Mary Harney described the actions of some banks in the lead-up to the financial crash.
The Government, she said, should have dug deeper, asked harder questions and taken unpopular decisions to stop the economic crisis.
Ms Harney blamed an enormous explosion of cheap credit, undue confidence in the regulatory regime and allowing public spending to grow too quickly as the main reasons for the crash.
She told the Banking Inquiry that while she was proud of economic and social achievements, “those governments also made mistakes, which I certainly regret”.
The former Tanaiste said it “does nothing to ease my regret that we, as Government, had a heavy responsibility for not digging deeper, asking harder questions and taking (unpopular) decisions before we did from 2008 onwards”.
Former Minister and Green Party leader John Gormley said he believed the Government was misled by the banks and there must have been some individuals in banks who knew they were insolvent.
He described getting a phone call from then finance minister Brian Lenihan on the morning of September 30, 2008, who explained the urgency of the situation and told Mr Gormley he was welcome to come to Government buildings.
Mr Gormley said he told the minister this would not be necessary “if we were going with the ‘David McWilliams option’ – a full bank Guarantee – and Mr Lenihan confirmed that
was what was being proposed.
“At the time Minister Lenihan was a man who played his cards very close to his chest – I often found out what was going on in his mind from David McWilliams,” said Mr Gormley.
Mr Gormley explained he listened to Mr McWilliams’s advice.
Eithne Tinney, a former member of the EBS board, told the committee: “Banks have no sense of guilt about what they have done and if left unchecked they will do it all over again.”
Ms Tinney, an independent, former non-executive member of the board also criticised the Bank Guarantee as “indefensible” and said senior management at the society were “taken in by... so-called developers”.
Members of the inquiry met in private last night for deliberations on former Anglo Irish Bank chief David Drumm’s statement to the inquiry.
US-based Mr Drumm – who gardai want to question – has provided a witness statement and offered to appear before the committee by video link. The DPP has raised concern over the publication of the statement.
“The Oireachtas Banking Inquiry has received the legal opinion from the Director of Public Prosecutions on the statement. The committee has agreed not to publish the statement pending a full briefing from its own legal advisors,” an Oireachtas spokesman said.