Former taoiseach and minister for finance Brian Cowen returned to the Oireachtas banking inquiry at Leinster House yesterday to defend his role in government. There had been, he said, no intention to mislead the electorate about a bailout: they had only been trying to get the best possible deal. Similarly, his decisions on the banking guarantee had been based on the best professional advice. Political considerations had not intruded. And while the advice on bank solvency had turned out to be be entirely wrong, what was a man to do in a crisis situation?
Mr Cowen ignored the fact that the crisis had been building for some time, stoked by light-touch financial regulation. Reports of dodgy lending practices at the Irish Nationwide Building Society had drawn no sanction. He appeared unaware of the solvency squeeze on banks caused by a collapsing property market and particularly on Anglo Irish Bank. Eight months before the banking guarantee, the Department of Finance had warned that assurances concerning solvency given by the banks and the regulator could not be trusted.
The nature of the inquiry made it easy for the former taoiseach to waffle on and to pose alternative scenarios when placed under pressure. But he was crystal clear about a number of things: in spite of meetings with Seán Fitzpatrick and board members, he had never, ever, been lobbied to include Anglo in the banking guarantee.
That was not how he operated. As for the decision not to nationalise Anglo and the INBC, as finance minister Brian Lenihan had wished, he had been persuaded to that course of action by John Hurley, the former governor of the Central Bank. His mind had not been made up before the emergency meeting.
As for over-ruling his finance minister, the response was simple: they needed to come to a common position. There was no doubt about who was the boss on that night. Mr Cowen, as taoiseach, called the emergency meeting and chaired it. He regretted that a record had not been kept of the discussion. That was his fault. He also regretted that other Cabinet members had not been invited. Their treatment had echoes during the bailout. The question of why Mr Lenihan wanted to nationalise Anglo was ignored and, instead, Mr Cowen told the committee about his reasons for not doing so.
Warnings delivered by the Department of Finance were not acted upon. Policy appeared to involve papering over the cracks and keeping the show on the road until the “national interest” demanded a banking guarantee. As a political distraction, Mr Cowen implied that the EU was composed of bogeymen who had initially declined to help but then bounced the State into an unwanted bailout. For the simple-minded, it was all their fault.