Taoiseach Brian Cowen said this morning that the banking sector was "in denial" at the beginning of the economic crisis last autumn when it first came to the Government for support.
He said that at the time the banks believed they could still secure funding from the private sector when it had become very difficult to do. Mr Cowen claimed the banks had had problems accepting that their situation had worsened to such an extent.
The Taoiseach, who was speaking at the Irish Management Institute’s (IMI)’s National Leadership Forum in Sandyford, Dublin, also said Ireland's international reputation had been damaged by misinformation that suggested serious problems within the banking system amounted to difficulties for the economy as a whole.
In particular, Mr Cowen said the State's reputation had been damaged by reports that had circulated in Europe claiming it had guaranteed 700 per cent of its Gross National Product (GNP) to support the banking system and make provision for bad debt. He said that in reality if all the banking debts went bad the Government guarantees would only amount to about 230 per cent of GNP.
Mr Cowen added that agents from the National Treasury Management Agency would be going abroad to counteract such misinformation and let the international community know that the scale of the problem in Ireland was not as bad as had been suggested.
The Taoiseach told delegates that it was time for business leaders "to step up to the plate" and assist in addressing the misinformation circulating about the Irish economy. He said that all sectors of society had a duty to come forward and not be quiet as business leaders had been on the Lisbon Treaty.
Mr Cowen claimed that business leaders hadn't wanted to get their hands dirty during the last referendum but that now with a second referendum due it was encumbent on them to get out there and to promote the great support the country was getting from Europe.
He said that with next week's supplementary Budget, we would see the start of a strategic method to handle the economic problems Ireland faced.
Mr Cowen also told delegates at the forum that the Government would not be going after the most vulnerable in next week's supplementary Budget.
Asked about the issue of junior ministers, Mr Cowen admitted that they were "part of the problem" but refused to confirm whether the number of minister would be cut ahead of Tuesday's Budget.
The Taoiseach said that access to money in the form of small business loans was a big issue and added that a new regulatory system would be put in place which would be transparent. He also said that he wanted to see Irish banks "return to their core franchises" which is to provide loans.
According to a new survey published to coincide with today's event, over half of the country's business leaders believe that restorning confidence in public finances and the financial system should be Ireland's top short-term priority.