ECB not a possible scapegoat, says Trichet

Former European Central Bank president Jean-Claude Trichet has said the bank should not be regarded as a scapegoat for Ireland’s economic crash.

After a long public meeting in Dublin yesterday at which he resolutely defended the ECB's actions in the Irish rescue and took questions from members of the Oireachtas bank inquiry panel, Mr Trichet told The Irish Times the ECB had been extraordinarily supportive of Ireland.

“The sentiment expressed by some discussion I had with a number of questioners was not in line with the confident relationship I had with the successive ministers for finance,” he said after his question and answer session.

“I have to say with great emotion particularly with Brian [Lenihan] because he was under the heat of the crisis on one hand and had this dramatic personal disease on the other hand. So all this is not captured.”

Asked if the ECB gets a bad deal in Ireland over its role, he said the institution had tried to help by all possible means.

Without naming any critics, he said: “I see that a number of persons might consider appropriate to take the ECB as a possible scapegoat and I think that it’s not the case at all,” he said.

“We can prove that in the run-up to the crisis that either we had no responsibility at all or we made the early warning, particularly as regards the competitiveness that were of the essence. And, of course, it’s not our fault if Ireland was terribly vulnerable taking into account the huge size of the banking sector.”

He was speaking after addressing an event organised by the Institute of International and European Affairs and attended by the bank inquiry committee. He was questioned by the committee about several of the most controversial episodes in the Irish debacle.

On correspondence with Mr Lenihan in November 2010 just before Ireland applied for the EU-IMF bailout, Mr Trichet said: “The exchange of letters made clear that as lender of last resort . . . we could not continue to be the lender of last resort to institutions that were clearly considered insolvent.”

The former ECB chief added that he made no request to Central Bank governor Patrick Honohan to go on RTÉ Radio in November 2010 to announce to the Irish public that Ireland was entering an IMF-EU bailout programme.

“I have absolutely no memory of such an announcement,” he said. “I certainly didn’t ask him to make public anything.”

The ECB, he said, could not have continued to extend unlimited credit.