Brian Cowen admits ‘miscalculation’ on bailout news

Former taoiseach Brian Cowen said it was not his intention to deceive the Irish public about its talks in November 2010 with the European Union and International Monetary Fund on accessing a bailout programme and accepted that it was a "miscalculation" on his part not to reveal this sooner.

“The bottom line is that we should have been saying: ‘Look, we have these people coming over, we haven’t applied yet, we are in discussions, we’ll see where it takes us, we should come to a conclusion on it fairly soon one way or the other.’ That would have been the accurate, up-to-date situation as it was.

“It wasn’t our intention not to provide clarity, it was the timing of providing it, I suppose, where we fell down.

“There’s no benefit in a government misleading its own people. We were simply trying to get as full a picture as we could before formally applying for a bailout.”

Leverage

He said the government was trying to use as much leverage as it could “to get as good a deal as we could get” before formally applying for a rescue package.

Ireland applied for its bailout on November 21st, 2010, three days after Central Bank governor Patrick Honohan had gone on RTÉ radio to inform the public the Government would probably be seeking a troika loan.

Mr Honohan told the committee in his evidence he had been responding to a sense of panic that had been building around the security of Irish banks.

His intervention followed earlier government denials of reports that Ireland was in talks about a bailout.

Mr Cowen said he was “satisfied” Mr Honohan’s radio interview didn’t have a “detrimental impact” on the talks with the troika but it did have a “detrimental impact politically” for the government.

This is the first time Mr Cowen has spoken publicly about this matter. He spent 9½ hours in front of the inquiry on Wednesday answering questions about his time as taoiseach from May 2008 to February 2011.

Mr Cowen stood over the decision to issue a blanket bank guarantee on the night of September 29th, 2008, saying it was the best option available at the time. He insisted he did not overrule former minister for finance Brian Lenihan on the night in question.

Weight of risk

Mr Cowen said nationalisation of

Anglo Irish Bank

, an option favoured by Mr Lenihan, carried a weight of risk he was not prepared to take.

Mr Cowen told the committee the government could have walked away from the guarantee decision on the night in question.

“We could have walked away from our responsibilities and abdicated our responsibilities saying: ‘I’m not big enough, we can’t make this decision. It’s too big.’

“With all the risks and all the pros and cons you’ll find 20 arguments why you wouldn’t do this and 20 arguments why you won’t do that. And if you lose the sight of the basic thing, that if you don’t have a banking system tomorrow or next week, there’s hundreds of thousands of people who are waiting for their wages who mightn’t get them and all the rest of it. People find it hard to understand how it can get that bad that quick.”

Mr Cowen denied he had shown poor judgment by attending social functions with executives of Anglo in 2008, including playing golf with Anglo’s chairman Seán FitzPatrick in July that year.

He said nothing inappropriate had happened and there had been no discussions about the bank itself. "As God is my witness, that is the truth," he said in reply to a question from Sinn Féin's Pearse Doherty.