'Deep regret' for Lenihan as he admits government made mistakes

MINISTER FOR Finance Brian Lenihan said he “deeply regrets” the events that led to the banking crisis and said some decisions made by the government of the time were wrong.

Reports by the new Central Bank governor Patrick Honohan and international banking experts Klaus Regling and Max Watson, published on Wednesday, found the greatest extent of “moral blameworthiness” lay within the banks themselves, Mr Lenihan said.

“They then do make the point that the system of regulation and control that should have been in position, failed in an adequate defence to protect us against this.

“And they also make the point that wider political decisions in relation to the economy over a long number of years contributed to the crisis. Yes I accept that.”

Speaking on RTÉ Radio One's Morning Irelandprogramme yesterday, Mr Lenihan said there had been no appetite for introducing a property tax in the political system.

“There’s nothing in Mr Regling’s report that surprises me. I’ve had to live with these problems since I became Minister for Finance,” he said.

“I’ve had to accept the analyses in this report for over two years now, and I think the Opposition parties should accept it at this stage as well rather than simply oppose everything the Government does, which has been their policy in the last two years.”

The construction-related element of the boom became far too predominant from the beginning of the decade, he continued. A “vicious cycle” of bank-led overseas borrowing had fuelled the property boom which was unsustainable in the long run. “I do accept that, yes.”

He added the banking guarantee was essential because it gave the Government two years to sort out “a very messy position” in the banking system.

Asked if he was open to the idea of Anglo Irish Bank being wound down, Mr Lenihan said an immediate collapse of an institution could not be allowed.

Asked if an apology was due from Fianna Fáil, he said: “I certainly deeply regret what happened because there were decisions made that were wrong decisions.

“Yes we did spend too much money and yes we did neglect our tax base – and they were mistakes.

“But let’s be clear about it, they weren’t mistakes that were highlighted by very many at the time and indeed many of those who predicted the collapse of the property bubble did so at a very late stage.”

He added: “An expression of regret in my language is a sorry, yes.”

Mr Lenihan said while the Government had to take responsibility, the reports pointed out the general and socio-political context, “and the socio-political context was that more and more money was demanded to be spent all the time, and less and less tax all the time”.