BUSINESS OPINION:It appears to have been Cowen's bad luck on the banking crisis that he surrounded himself with the wrong advisers .

BRIAN COWEN’S mistake was not that he listened to people about Anglo Irish Bank – but that he listened to the wrong ones.

One thing that has emerged from the froth of last week was that in framing a response to the crisis that enveloped the country from 2007 onwards, Cowen leant heavily on a “kitchen cabinet” of business people, including Seán FitzPatrick, Fintan Drury, Gary McGann and Alan Gray.

His engagement with them was clearly far more substantive than implied by his depiction of the so-called “golfgate” meeting as just a social gathering.

Economist Alan Gray has made it clear he went to the dinner on foot of an invitation and with the express purpose of discussing economic measures to help small business. The subsequent revelation he was consulted on the 2008 bank guarantee indicates his relationship with the Taoiseach was a close and ongoing one.

There can be no other explanation for Cowen choosing to ring Gray on the night of the guarantee. Gray said it was because he was member of the board of the Central Bank. But given the governor of the Central Bank was available to him, Cowen was obviously seeking Gray’s views in a wider capacity.

Among the questions now remaining to be answered is, who else did Cowen sound out that night?

This is academic, however, because whoever they were, none of them seem to have foreseen the danger of a blanket guarantee. The first and most fundamental misstep by the Government in its response to the crisis was not grasping the size of the banking problem and the need to in fact place a firewall between the State and banks, rather than tie them together with a guarantee.

His kitchen cabinet was clearly too close to the problem and arguably too instrumental in its creation to be able to step back far enough to see what was going on.

It would appear then to have been Cowen’s bad luck – or his fate – that he chose to surround himself with the wrong people.

This is not to let the Taoiseach off the hook. Politicians are by their nature not experts in areas such as economics, but what they should be good at is choosing who they listen to.

It is not as if there were not other, more radical voices in the debate at the time: the most notable being the economist Morgan Kelly (who, it’s worth noting, has not – at least as of last month – been invited into the Department of Finance to discuss the economy).

There is something pleasingly karmic about the notion that Cowen’s failure was due to the fact he was failed by his kitchen cabinet of Celtic Tiger hotshots who turned out to have feet of clay.

His undoing was the culmination of a 20-year process which saw the progressive degradation of the policymaking and advisory capacity of the Civil Service and the Department of Finance.

Hence, when push come to shove, the people who should have been there to advise him – the secretary of the department, the Central Bank governor and the Financial Regulator Patrick Neary – were not up to the job.

And it’s not too much of an exaggeration to say it was Fianna Fáil’s brand of politics that was primarily responsible for this.

One incident is instructive in this regard – the introduction of the Special Savings Incentive Accounts by Cowen’s predecessor as minister for finance, Charlie McCreevy, in 2000.

Requests under the Freedom of Information act in 2002 revealed his officials had very serious reservations about the scheme, under which the government gave people €1 for every €4 they saved over five years.

The main point made by the department was there was no evidence such schemes had any beneficial impact on saving behaviour or economic activity generally – something that has turned out to be the case. This brushed aside the policy fig leaf for this particular incident of pork barrel politics.

While the department’s arguments ran to pages and pages, there was not a single document setting out the reason why McCreevy did not accept the arguments and went ahead to introduce the scheme, against their advice.

If the Department of Finance was being treated with such contempt by the Fianna Fáil government in 2000, then it really should come as no surprise that by 2008 it was a hollowed-out organisation whose opinions carried very little weight and which was incapable of standing up for itself.

This brings us neatly to the issue of the reform, or more accurately of the rebuilding of the Department of Finance, by the next government.

Sitting on the current Minister’s desk is a report by Rob Wright, former head of the Canadian department of finance. The report reviews the performance of that department over the past 10 years, how it dealt with the current crisis and, based on this assessment, recommends changes for the future development, structure and staffing of the department.

According to the department, “the report provided a set of recommendations to modernise management, reform existing organisational structures and increase substantially technical, economic and other skills, some of which will require consideration by government”.

Publishing the report might be a good start.