Brian Cowen’s appearance at the Oireachtas banking inquiry last week had many politicians and media in Leinster House purring about his intellect and his robust debating skills, qualities that made him a formidable politician in his pomp.

Cowen clearly had many qualities to have made the journey from rookie politician in 1984, when he won a byelection in Laois-Offaly at the age of 24, to the office of taoiseach in May 2008.

Yet the evidence presented over the near 10 hours of the hearing painted a picture of a man who sleepwalked into the financial crisis as minister for finance.

In August 2007 signs of turmoil began to emerge in global financial markets. The following month UK bank Northern Rock faltered. In November the domestic standing group was told of an increased risk of liquidity issues arising for Irish banks.

Given all this, Fianna Fáil’s Michael McGrath asked why someone wasn’t charged with examining the underlying health of Irish financial institutions.

Cowen replied that “unfortunately” there wasn’t a “realisation that there could be a systemic risk”.

In late 2010 the National Treasury Management Agency told David Doyle, the then secretary general of the Department of Finance, that if the government wanted it to put money on deposit with Irish banks it would have to give it a "letter of instruction".

The agency had concerns about holding money on deposit with Irish banks at the time, in particular with Anglo Irish Bank. It wanted some political cover in the event that things went pear-shaped.

Reluctance

According to McGrath, the NTMA placed about €500 million with Irish banks at the time. Remarkably, Cowen didn’t challenge the reasons for the agency’s reluctance to put money on deposit with Irish banks, particularly Anglo. He just accepted the advice of officials to issue the letter. “It wasn’t big money, as you say,” was his response to McGrath.

Fast forward to St Patrick’s Day in 2008, when Anglo’s share price tanked 15 per cent amid rumours about the bank’s health and the potential size of Seán Quinn’s stake in the institution.

After consulting with then Central Bank governor John Hurley, Cowen took a call from Anglo chairman Seán FitzPatrick. According to Cowen, FitzPatrick said there were market rumours about Quinn's large shareholding and this was causing the bank problems. Cowen's response was: "These are matters he needed to refer down to the Central Bank and to the financial regulator and have it dealt with there."

You might have thought that this would set off some alarm bells about Anglo’s viability but Cowen “didn’t see it as something in the business model”.

Cowen did nothing further about the matter. “These, these were regulatory matters and I don’t believe there should be political interference in relation to regulatory matters,” he said.

Anglo dinner

On April 24th, Cowen was invited to a dinner with Anglo executives by Fintan Drury, a non-executive director at the bank and long-time friend of the former taoiseach. The dinner was intended to mark Cowen’s imminent departure from the Department of Finance.

“It was informal. There was no big speeches really,” Cowen told the committee.

Cowen’s evidence is that the Anglo’s difficulties were not discussed. “I didn’t do any business, and it was a very social occasion,” he said.

Given all the rumours circulating about Anglo at the time, it seems odd Cowen didn’t make enquiries about its health.

At the time of the handover of the department to Brian Lenihan, Cowen said there "wasn't a crisis at that point", just some concerns about liquidity issues.

It was the autumn of 2008 before the penny dropped on how exposed the Irish banks were to the property sector. By that stage, Ireland was like the Titanic about to hit the iceberg. It was just a matter of how big the hit would be.

Cowen is back at the inquiry today, to answer for his time as taoiseach between May 2008 and March 2011. The focus will likely be on the night of the bank guarantee, the nationalisation of Anglo and the negotiation of our EU-IMF bailout.

Evidence to date suggests the blanket bank guarantee was very much his decision, one he seems to have made up his mind about in advance of the various parties gathering in Government Buildings on the night of September 29th, 2008.

His political legacy will probably be framed by the guarantee and the bailout. Yet his poor performance in his latter years as minister for finance was arguably more pivotal in terms of the property and banking crash.

If Cowen had been alive to the threat of the financial crisis that was brewing from mid-2007, his government would have had more options in September 2008 when formulating a response and the final bill for taxpayers could have been a lot lower.

Twitter: @CiaranHancock1