'No regret' over bailout confirmation

Central Bank governor Patrick Honohan has said he does not regret his decision in November of last year to confirm on radio that the EU and the IMF were preparing a bailout package for Ireland.

He told the Oireachtas Committee on Finance, Public Expenditure and Reform that he welcomed a question from Sinn Féin's Pearse Doherty, who asked if he felt his intervention had damaged the Government's negotiating position at the time.

Prof Honohan said he was quite satisfied and had no doubt that his decision to tell the Irish people and international observers, was very valuable at that point. He said that over the previous number of days there had been intensive preliminary negotiations over the loan and there was "a sense that something was stalling, that the Irish Government might somehow not go ahead with the deal".

He said this view was causing a heightened sense of concern in many quarters that there was going to be a "big meltdown". There was concern in the markets and among European policy makers and amongst his colleagues in the European Central Bank.

"I was telling my colleagues in the ECB, don't worry, the negotiations are going fine." But he said the concerns persisted and he decided to speak out and tell people what was going on.

He did not accept the proposition that he had undermined the Government's negotiating position and did not think the deal that was eventually arrived was a bad one, though he did think there were a lot of missed opportunities.

Some decisions were made more quickly than they needed to be. He said one idea he had at the time had been recently mentioned by the new head of the IMF, Christine Lagarde, that there would be a direct injection of European money into the banks, rather than through the Government. This would mean the European institution injecting the money would get the shareholdings in the Irish banks, and the risk to the Irish State would be reduced.

Prof Honohan said he had a "small regret" that he might have wrong-footed the then minister for finance, the late Brian Lenihan, although he said Mr Lenihan could have made the announcement the previous day.