Cowen at Bank Inquiry
Focus today is on Cowen’s time as taoiseach and includes bank guarantee and Anglo nationalisation
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Good morning and welcome to The Irish Times’ live blog of the Banking Inquiry.
This week kicks off with Brian Cowen: The Sequel.
During last week’s marathon testimony, Mr Cowen dealt with his time as minister for finance, during which he apologised for his role in the economic crisis but delivered a robust defence of his policies.
His performance throughout the day was – fairly or unfairly – described as a microcosm for his time in public office. Having cut a bullish, formidable debater on top of his brief during the early stages, he began to flag in the second session as the day wore on.
It almost seemed as though he’d had too big a lunch.
My name is Colin Gleeson and I hope you will join me today as I bring you live updates on today’s evidence from the windowless dungeon that is Committee Room 1, Leinster House.
Today will focus on Brian Cowen’s tenure as Taoiseach.
Like last week, the day will be split into two sessions.
The first session from 9.30 am – 1.30pm will focus on the period from Mr Cowen’s appointment in May 2008 until January 2009.
That means that, in many ways, this morning’s session is the one most people have been waiting for since the Banking Inquiry began.
For the first time, the country will hear a full account of the fateful events of the night of the Bank Guarantee from the man who was in the hot seat.
Also encompassed this morning will be the nationalisation of Anglo Irish Bank.
Since his pre-prepared opening statement was leaked, we know Cowen is expected to confirm he overruled the then minister for finance Brian Lenihan in relation to the “guarantee arrangement” of the night of September 29th, 2008.
The Bank Guarantee pledged to safeguard all deposits, covered bonds, senior debt and dated subordinated debt with Allied Irish Bank, Bank of Ireland, Anglo Irish Bank, Irish Life and Permanent, Irish Nationwide Building Society and the Educational Building Society.
It’s believed Mr Cowen will say he held a private meeting with Lenihan on the night, and that while it was not a confrontational exchange, the minister for finance favoured nationalisation of Anglo Irish Bank.
In the afternoon session, the Inquiry will broadly focus on the period from January 2009 until the general election in early 2011.
This period covers Ireland’s entry into the Troika’s bailout programme.
Cowen is also expected to be questioned about the establishment, operation and effectiveness of the National Asset Management Agency (NAMA).
So hold on to your hats.
09:33Feel free to get involved by tweeting me @ColinGleesonIT
09:45The committee is currently in private session, but today's hearing should begin in the next couple of minutes.
We’re away, and Cowen is delivering his opening statement.
We’re told he wants 45 minutes to deliver it.
Like last week, he has begun by saying he accepts responsibility for his role in the crisis and is sorry for that.
He says there was a “clear misjudgement about the overall risks and possible impacts”.
09:58He says that on the night of September 29th 2008, it was reported to the meeting that Anglo would need support the next day and Irish Life & Permanent would need it by the end of the week.
He says the governor of the Central Bank believed we had a “system wide banking crisis”
in Ireland and the view was that the failure of a bank of systemic importance would have “catastrophic effects” on the Irish banking system and on the wider economy.
Getting liquidity back into the Irish financial system was “absolutely critical” if we were to avoid increasingly illiquid banks from drifting into insolvency.
“On the night of the guarantee being issued, the Financial Regulator certified that the six main financial institutions in Ireland were solvent,” he says.
“The guarantee did stop the outflows from the Irish banking system and indeed reversed it for a period so that money came back into the system enabling the lending institutions to continue to operate.”
10:01He says a “silent” run by depositors had begun on all Irish banks.
He says he wishes to state that what he relays here about what happened on the night of the guarantee is “to the best of [his] recollection, knowledge and belief” a true and accurate account.
“However I cannot be absolutely certain of the exact chronology of events as they unfolded but I believe that this account provides a substantive recollection of that night’s events and the process by which the decision was reached.”
At the Government meeting on Sunday September 28th, the day before the Guarantee, Brian Lenihan gave an oral presentation to “update the Cabinet on the evolving situation”.
“He made them aware of the context in which we were operating in general terms,” says Cowen. “It is noted that no decision was taken at the Cabinet meeting on that day in relation to this matter.
“The international banking situation was very volatile and the liquidity position of Irish banks was being seriously affected as a result.
“At that meeting, the Minister for Finance reiterated the position that the Government was committed to the stability of our financial system.
“The Government wanted to protect the whole financial system and secure its stability and ensure that all deposits in Irish financial institutions were safe.”
10:09By the following day, he says money was continuing to leave the system and the rate run increased to such an “alarming degree” that arrangements were made for a meeting to take place at the Department of An Taoiseach after close of business “to review the situation”.
This meeting took place in, appropriately enough, the meeting room adjacent to the Taoiseach’s personal office.
“It is worth remembering that over the course of that evening, while I remained in this meeting room some people left the room for the purpose of consultation, information gathering or to undertake some technical work,” he says.
“All major decisions were taken in the Taoiseach’s meeting room.”
10:12He says that from the beginning of the meeting, those in attendance were Cowen himself, the Minister for Finance Brian Lenihan, Attorney General Paul Gallagher, Secretary General of the Department of Finance David Doyle, Assistant Secretary of the Department of Finance Kevin Cardiff, Governor of the Central Bank John Hurley, Deputy Governor of the Central Bank Tony Grimes, Chairman of the Financial Regulator Jim Farrell, Chief Executive of the Financial Regulator Patrick Neary and Eugene McCague from Arthur Cox & Co Solicitors.
10:12Secretary General of the Department of An Taoiseach Dermot McCarthy joined the meeting after it had started having been delayed performing other duties.
He says he has “a recollection” that another Department of Finance official, William Beausang, was present for “some of the meeting” also.
The meeting began at approximately 6.15pm.
He says he took no notes from the meeting as he was chairing it.
Can’t imagine that’s going to go down too well later.
10:14He says that the seriousness of the discussion “become clear very quickly” as the meeting began.
He says Neary and Farrell from the Financial Regulator’s office “outlined their serious concerns”.
“I recollect that they were of the view that something significant had to be done immediately to stabilise the situation,” he says.
“In that respect, they spoke of the need for the introduction of a guarantee to be considered in view of the serious situation which had developed across the financial system.”
The position of the ECB (of which Governor Hurley was a member of the Governing Council) was that “no bank was to be allowed fail because of the contagion effects that could ensue in the euro area”.
“In other words, there could be no ‘Lehman Brothers’ type event in the euro area.”
He says confidence “had to be restored as a matter of urgency” or else the run rate of outflows could accelerate and leave us with “an irretrievable situation”.
He says the Governor made the point that we would have “one go” at addressing this and if it did not work, “we may not get a second chance to revisit it as confidence would be gone”.
“Where a first initiative may be deemed inadequate by the market, putting forward a second course of action could then completely undermine our credibility.”
His outlining of the seriousness of the situation had an “immediate impact on all present”.
Lenihan contributed to the meeting at this point and “agreed with the analysis and the up-to-date position given by the Governor”.
“He indicated that he felt part of the solution would be the nationalisation of Anglo,” he says. “I did not think that nationalisation should be a first course of action and I said so.
“As I said, my first thoughts in assessing the situation that had been outlined was that I did not find the nationalisation option attractive as a first response.”
He says he had “a number of reasons” for that.
First of all, he did not see it as a “confidence building measure” at that stage given the volatility in the markets.
“For example, would it create an expectation that other nationalisations were to follow?” he wonders.
“Secondly, nationalising a bank meant taking all of the assets and liabilities onto the State’s books there and then, immediately.”
The nationalisation option was “in effect an open-ended guarantee”.
Therefore, the guarantee option “looked like a safer option if it was time limited”.
10:23He says the view was that the banks in Ireland were solvent but illiquid to varying degrees depending on the institution and the best of them, had at most only a few weeks left assuming the deposit outflow rates did not accelerate.
Allowing Anglo to fail was “simply not an option on the night”.
“It would have implications for the whole system,” he says. “The costs involved in terms of causing a run on other banks as well would put the whole payments system at risk and cause irreparable damage to the economy as a result of a banking meltdown.
“It would, in Governor Hurley’s words, ‘set the country back 25 years’ as he put it.”
He has given the usual line about there being no good options.
It was “strongly stated” to the government by the regulatory authorities that this was a liquidity problem and not a solvency problem.
“At no stage was it contemplated then or indeed until the NAMA valuation of loans emerged, that the funding gap for the banks would reach the levels that it did or that the impairments of loans in the banks would be of the horrific nature or magnitude that came to pass,” he says.
Word came into the meeting that the Chairman and CEO of the two main banks were looking to meet with them.
Cowen says he adjourned the meeting for a short break.
During this break, he decided to get an external view.
Alan Gray, an economist and a Central Bank board member, was someone whose views he “respected”.
Cowen phoned him and asked him what he thought of a guarantee option being used.
Mr Gray “emphasized that providing a guarantee would obviously give an advantage to those institutions to whom the guarantee would apply vis-à-vis competitors since they would have the backing of the Irish Government”.
10:29Mr Gray also stated that if they were considering the introduction of a guarantee of any kind, then it should be “strictly time limited”.
During this break from the main meeting, himself and Lenihan “weighed up the options” themselves in Cowen’s personal office.
“We reviewed the discussions from the meeting thus far,” he says.
“He was minded to still go the nationalisation route for Anglo and guarantee the rest of them.
“I explained my reservations about it and reassured him that nationalisation was something that we could not rule out in the future and would remain an option available to us.
“I also told him that a time limited guarantee seemed to me preferable than giving an open-ended guarantee which a full nationalisation would entail.”
He says they were “talking the issues through and there was no question of our conversation being in any way adversarial or confrontational with each other”.
“Both of us were deliberating with each other and striving to find the best course of action for the country at this point,” he says.
The meeting resumed with senior officials in the main meeting room beside his personal office.
They were “reminded” that the bank representatives were waiting in the building and after some time they were called into the meeting.
The representatives from the banks confirmed that the position was “every bit as bad” as the Government believed and “immediate action was necessary” to address what was happening.
“We were informed that the money markets had decided that Irish banks were to be avoided,” he says.
“The bank representatives were concerned about INBS as well as Anglo and they wanted to be differentiated from those institutions in that respect.
“Without stating it openly, it was clear to me that they wanted those two institutions nationalised and a guarantee to be provided for their institutions.”
After the bankers left, he recalls Kevin Cardiff, Assistant Secretary of the Department of Finance, being asked at some point by the Secretary General, Mr David Doyle to give his view having heard everything.
Mr Cardiff was of the view that a nationalisation of Anglo and a guarantee for the rest of the banks was his preference.
“He accepted it was a judgment call and there was no single right answer to our dilemma.”
Eventually, he put it to the table that it seemed “a full guarantee option provided the best prospects of addressing the urgent liquidity problem and of sending a clear message that Ireland was standing behind the financial system which would be understood by the markets”.
“We hadn’t much room to manoeuvre,” he says. “It would have the benefit of being an impactful measure which could solve the immediate and pressing problem.
“It is my recollection that I then asked everyone could we run with a guarantee only approach in principle. There was agreement on that. Further details would now have to be worked out.”
They then went on to discuss then what way a guarantee would be structured.
The pricing mechanism and the category of cover were also discussed.
In deciding on the senior bondholders, he says, “it is important to point out that the holders of these types of bonds in Irish financial institutions include the proceeds of Irish pension funds, large credit union deposits as well deposits from religious and charitable trusts”.
“While no one would suggest that those funds should be at risk, in law all holders of bonds of the same category whether foreign or domestic have to be treated the same.
“In other words you cannot protect some senior bondholders and not others.”
Brian Lenihan had apparently gone home and was not present in the room when the dated subordinated debt issue was decided upon.
“He had a very busy schedule to fulfil from early the next morning.”
10:44Cowen says he left Government Buildings around 3.30am.
10:46On the decision to nationalise Anglo, he says the Government “could not allow a situation to develop” where the collapse of the bank might have occurred and the Government and the taxpayer would have been faced with the prospect of immediately having to pay out billions of euros to customers who had deposits at the bank.
On the bailout, he says that on 19 November, ECB President Mr Trichet sent a letter to Minister Lenihan threatening withdrawal of ECB funds in the absence of a formal bail out request.
“This was not well received by us.”
10:49“We had a Government meeting on Sunday 21 November and made the decision to request EU/IMF assistance. Based on the progress that had been made in Dublin we decided to formally enter talks.”
He says that when they tried to see if there could be burden sharing by unguaranteed senior bondholders during the subsequent discussions, the IMF personnel in Dublin were “sympathetic” but when it was referred to a higher level within the IMF and a discussion took place with some of the larger Member State contributors to the IMF, there was “total opposition to it”.
Timothy Geithner, US Treasury Secretary, was opposed because he claimed it would “totally undermine market access for those European countries that were in trouble”.
“We also understand that the ECB were opposed to it for the same reason,” he says.
“Without the EU Commission, ECB and IMF all being in agreement, it was not possible to have the burden sharing issue included in the Programme.
“It was made clear to us that any attempt by us to burden share with senior burn bondholders would mean no programme for Ireland.”
Quite a lot of information there to assimilate.
Having finished his opening statement, Cowen is immediately asked about a report in this morning’s Irish Times, which says yhe Department of Finance discussed methods of addressing financial difficulties at Anglo Irish Bank on the same day in 2008 that he met Anglo officials at a social function.
Sarah Bardon reports that Mr Cowen was copied into emails from departmental officials hours before he attended a board dinner at the bank’s headquarters at St Stephen’s Green on April 28th, 2008.
The Irish Times understands the email outlined several possibilities for the future of the bank. It was sent between department officials, with Mr Cowen included in the exchange.
He says the article was “brought to [his] attention this morning” but that he doesn’t know what it refers to.
He says he’s “free to answer any question here about it” about insists his evidence to the committee last week in relation to the Anglo dinner was true and accurate.
“I didn’t discuss any issues of substance with Anglo then or subsequently,” he says.
He says normal practice would be for his private secretary to screen emails before he sees them.
“A lot of this can be a distraction,” he says.
10:59You can read Sarah Bardon's report here.
Sinn Fein finance spokesman Pearse Doherty is asking about a game of golf he had with Sean Fitzpatrick and Fintan Drury, who is a friend of Cowen’s and a former Anglo executive.
He wants to know how it came about.
11:05It was organised to do talk about "economic issues" he says.
He insists that no discussion on banking took place.
Much like last week, Doherty is of the view that this “stretches credibility”.
“I don’t believe it should stretches credibility,” says Cowen. “It’s the truth.”
“If people want to think up conspiracy theories, I can’t do anything about it.”
11:07It was yet another “informal get-together”.
He seems a bit tetchier today.
Perhaps he was a bit disappointed at the media reaction to last week’s appearance.
Labour senator Susan O’Keeffe says she has documents from the department of finance that she wants to ask him about, but apologises that he hasn’t been furnished with copies.
Cowen isn’t impressed and tells her she should have sent them on to him so he could take a look and answer questions on them.
She reassures his that he doesn’t have to answer any questions that he can’t answer, having not received the documentation in advance.
O’Keeffe wants to know why there is no “proper full note” on the night of the guarantee.
“I was the chair of the meeting,” says Cowen. “I have to take responsibility for that really at the end of the day, even though I didn’t set about for it to happen that way. I was the chairman.”
He says he is “sorry there isn’t a record”.
“I personally would like there to be a record,” he adds.
11:21“It would be to the protection of all of us if there were,” he says.
O’Keeffe is asking Cowen why he didn’t recall the Cabinet for a meeting on the night of the Guarantee.
“I take the point, and it’s a matter of regret to me, that it would have been better for me even to call a Cabinet meeting at 6am the next morning,” he says. “But my judgment on the night was this had to be out by 7am the next morning.
“They had been up at a Cabinet meeting on Sunday. It moved that quick that we had to make decisions on Monday night.”
Cowen says “it wasn’t meant” on his part not to have a meeting.
“I was very much a chairman rather than a chief for anyone who remembers my chairing of Cabinet meetings,” he says.
O’Keeffe wants to know if it’s true he said: “I’m not F-ing nationalising Anglo.”
“Again I don’t recall making that statement,” says Cowen. “But that’s the second time you’ve ascribed ‘F-ing’ to me in this tribunal,” he adds, a smile spreading across his face.
O’Keeffe says she’s quoting a reporter.
“I don’t use that language as often as you’d think,” says Cowen.
It’s all coming out now.
Committee chairman Ciaran Lynch thinks O’Keeffe is acting the maggot a bit and should get back on to the real business of the day.
“Senator O’Keefe, can you move away from the colour and get back to the facts,” he says.
“He was talking about the tension in the room and I was following up as to how much tension there might have been,” she insists.
Lynch is having none of it.
“In terms of understanding the crisis, it gives a bit of colour but not really,” he says.
“Well it does help to understand the crisis,” she rather sheepishly repeats.
12:05They've gone for a coffee break but should be resuming any minute.
12:11We're back and Socialist Party TD Joe Higgins is up.
He is asking about the external advice from Alan Gray.
Higgins asks whether he is aware that a close business associate of Mr Gray’s was also a member of the board of Quinn Insurance.
Cowen says he didn’t know what and isn’t sure it’s true.
He says Mr Gray was “a person who was on the Central Bank’s board and had a lot of competence”.
Joe is asking about the golf game with Sean Fitzpatrick and Co.
He wants to know how it could be possible to have a discussion about the economy without talking about banking.
“The issue was how we could improve competitiveness in the economy,” says Cowen.
He says they were “basically out there fishing for ideas”.
“It wasn’t a formal think tank operation where you’re sitting down to have an agenda type meeting.”
It was “basically to get a read from people as to how they saw the economy going”.
On the night of the Guarantee, it has been said Cowen came into the meeting with the Guarantee in his mind as the benchmark on which everything else would be judged.
“No I hadn’t my mind made up going into the meeting,” Cowen insists.
He repeats the assertion made during his opening statement that comments made by Central Bank governor Hurley made “a deep impression” on him, “and everyone else in the room”.
It became clear there were “urgent” decisions to be made.
Fianna Fail finance spokesman Michael McGrath wants to know if he still thinks the Guarantee was the right decision.
He says it was the right decision “based on the information we had that night”.
“We had to avoid a run on the banking system,” he reminds the committee.
“If we took a more intermediate step, would it have worked?”
McGrath has asked Cowen to outline Lenihan’s reasons for favouring the nationalisation of Anglo.
“It’s a valid thing to put on the table,” Cowen says. “It’s as equally valid as what we ended up doing in terms of things to be considered.”
He says he “didn’t have a problem ideologically” with nationalisation.
“What Brian said - and I’m very conscious of the fact that he’s not here – his preference was for nationalisation. The problem with that is it cuts both ways.
“Will it bring on more nationalisations? Will it bring confidence? In terms of the turmoil at the time – and this was unprecedented stuff – my view was let's go with a temporary guarantee and if we have to nationalise later we’ll do it.”
Fine Gael TD Kieran O’Donnell is asking question now.
“Why on the night of the guarantee wasn’t there a formal crisis plan in place on the night?”
Cowen says he’s not being fair to the amount of preparation that had been going on in the months before.
“We had a nationalisation bill ready to go if that’s what we needed to do,” he says.
Legislation for a guarantee was also “ready to go”.
In terms of convergence of opinion on what to do during the meeting, Cowen says that had he gone down the nationalisation road, he would be getting it in the neck for having over-ruled the governor of the Central Bank.
We’re back on the golf game at Druid’s Glen.
“Was it poor judgment to go to that golfing outing?” he wants to know.
“I’d say all the individuals concerned, given what’s been made of it, would rather it hadn’t happened,” Cowen replies.
“I’m sure that’s true if only for the optics,” he says.
“But in the substance of it- and this is what’s important - the substance is I want to assure the Irish people I didn’t do anything untoward or inappropriate or discuss issues I shouldn’t be discussing with any individual bank at the expense or cost of anyone else.
“I didn’t discuss it and that’s the way I’ve always operated. I try to perform my public duties well.”
He has a real problem with this idea that “contact [with people] equals nefarious collusion”.
“I’m just asking the question,” is O’Donnell’s defence.
“You’re entitled to ask the question,” Cowen agrees.
“It needs to be asked,” O’Donnell insists, obviously enjoying the role of light-shiner on dark places.
“Of course – and it’s been asked two or three times – I’ll answer it again,” replies Cowen. “But please don’t interrupt me when I’m answering.”
“Please,” says an exasperated looking Ciaran Lynch as he puts his hands on his hips and shakes his head.
Pat Rabbitte’s reference to State-funded aviaries for politicians to display their plumage springs to mind.
Cowen is a bit upset now that his personal integrity is being questioned.
“Basically, really, it’s a question of integrity,” he says. “It’s a question of my integrity. It’s a question of my integrity as a person. It’s a question as to whether I would conduct public affairs in that way and the answer is no.
“I look to 27 years of public life as against going for a game of golf one day. That’s all I can do and I can’t satisfy a curiosity that I can’t satisfy because nothing untoward happened.
“Here under oath, there is no substance to it. It’s not the way I operate.”
Fianna Fail senator Marc MacSharry is asking about his relationship with Brian Lenihan.
“Was it good down the years?”
Cowen says it was “very good”.
“Were there disagreements?” MacSharry wants to know.
“Not on the big issues, no,” says Cowen.
He says the Taoiseach “must support the minster for finance” in relation to economic issues. “He had my full support.”
Cowen is asked about Jean-Claude Trichet’s assertion that he found out about the Guarantee through the media.
Cowen says he was informed “as soon as was logistically possible”.
“Maybe we should have phoned him at 4am,” Cowen ponders.
It’s put to him that perhaps they should have had an open line to the ECB throughout the night, given the consequences of what was being decided for the European banks.
Cowen looks miffed.
“Did other countries ring up the ECB about problems in their own banking systems,” he asks, rhetorically.
13:52Talking about the bailout now, Cowen says it was “difficult for me politically” when “people were putting it about that decisions had been made which hadn’t been made.”
13:55Fine Gael TD John Paul Phelan is up next but there is a short break as nature calls.
Phelan is asking about Alan Gray again.
He cites letters sent by Gray to Department of Finance secretary general Kevin Cardiff.
He wants to know “what role and authority” did Gray have to be offering advice to Cardiff.
“Was he on the payroll?”
Cowen says he wasn’t on the payroll.
“He’s a member of the board of the Central Bank,” he says. “He’s laying out his views. There’s nothing prescriptive about it. He’s giving his views as to what happens.”
He said he regarded that behaviour as that of “a conscientious member of the board”.
Senator Susan O’Keeffe has asked Cowen if anybody – anybody at all – lobbied him one way or the other in terms of a Guarantee, nationalisation, or “their preferred outcome”.
“All of the financial institutions would be dealing with the Department of Finance,” he says.
“The minister for finance had been meeting with the financial institutions, as would be his job. I was not personally lobbied in any way.”
O’Keeffe wants to know if he finds that surprising.
“I don’t,” says Cowen. “To the extent that people know me. I wouldn’t regard it as appropriate. That’s the way I operate.”
14:35They've now broken for lunch. The afternoon session has been pushed back to 3.30pm.
And we’re back.
Chairman Ciaran Lynch is looking for clarification on the issue of whether Brian Lenihan was present for the decision to include junior bondholders in the Guarantee.
Cowen says he doesn’t recall him being in the room when it was discussed with the governor.
Lenihan subsequently told him that he wasn’t in the room when that was decided.
On the issue generally, Cowen says he “takes the point” that under “normal conditions” you wouldn’t include them.
“Clarity to the market was given a very high premium,” he says.
“I would emphasise that volatility in the market was such that the view was you shouldn’t restrict market access for Irish banks from any source, even one that would not be included [in a guarantee] in normal circumstances.”
TD Eoghan Murphy has asked whether Lenihan kept Cowen informed in relation to the bailout.
Cowen says Lenihan “had a very tough job and he did it very very well”.
“He was a very capable minister. I was very happy to appoint him minister for finance and I’m glad I did.
“There were a lot of balls in the air and he was trying to keep them all up. As far as I’m aware and the Cabinet is aware, he kept us informed.”
Asked if he ever misled the public, intentionally or unintentionally, he says there was “no intention to mislead but I do accept there was a political miscalculation on my part once the IMF component of the troika came to Dublin”.
He has touched on the infamous doorstep of ministers Dermot Ahern and Noel Dempsey where they denied Ireland was in talks for a bailout. Ahern called it “fiction” at the time.
Cowen says this was an “unfortunate incident”.
“They said what they were told,” he says.
He is however critical of the two ministers for answering the question.
“What I would have said was ‘these are matters for the minster for finance, you better talk to him about it’,” he says.
“They weren’t giving misinformation,” he insists.
“We weren’t in talks...We were in discussions about the possibility of negotiations, but until we knew where we were going we weren’t even acknowledging that.”
Ah yes. Not talks. Just talks about opening talks.
Not to enter the bailout programme would have been to risk being left with no access to cash, he says.
“You don’t take chances like that. You can’t take chances like that.”
Senator Marc MacSharry is asking about the decision by Patrick Honohon to go on Morning Ireland and reveal that Ireland was about to enter a bailout programme.
He recalls that Kevin Cardiff told the inquiry he would have liked an hour’s notice and that it had set the government on the back foot from a PR perspective.
“Obviously it was difficult situation for us politically,” he says. “It did put us on the back foot. It was very unfortunate that that was the way it came out, that that was the way it was presented. That was a job for us to do and it put us in a very bad light.”
He adds that he doesn’t believe Honohon did it intentionally. “He was just asked a question,” he says.
MacSharry wants to know if Honohon was part of the cabal of “unnamed sources” who were “bouncing” Ireland into a bailout.
Cowen says no.
He then has a pop at people who leak stuff to the media anonymously. “It’s not a nice way to do things,” he says.
16:46Honohon’s intervention was “damaging politically” but did not, in the end, negatively affect the government’s negotiating position, he says.
16:51Cowen says there were people early in the discussions who said the fiscal adjustment should be €8bn in the first year.
Cowen is insisting that entering the bailout programme was in the best interests of the country at the time.
“The fact of the matter is – let’s be clear about it - it was in our interest to go into the programme at that point,” he says.
“It provided us with a fiscal framework, at an affordable price that was not available anywhere else, to do what needed to get done, as difficult as it was.”
As to whether the ECB would have followed through on its threat to withdraw emergency liquidity, Cowen says he “probably” agrees with Patrick Honohon that it wouldn’t have happened immediately.
“Prof Honohon says at the end of the day ‘it doesn’t mean they are going to pull it immediately’. I would probably concur with that. But where does it get you if the present policy wasn’t sustainable.”
17:04They're taking a fifteen minute break at this point.
Like something from the Oprah Winfrey show, Senator Sean Barrett has asked: “What’s the single biggest mistake that was made in the era from 2000-2008?”
Cowen says “a lot of mistakes I suppose were made”.
“I think that the biggest mistake we all made was failing to analyse as regularly...when you’re in a new currency and you no longer have control over your interest rates, you’ve got to find other parts of the tool kit to make sure you don’t end up where we ended up.
“In other words your fiscal policy and your incomes policy have to compensate.”
Joe Higgins has asked Cowen whether he saw the Trichet letters to Brian Lenihan, which threatened the removal of emergency liquidity if the State didn’t accept a bailout, as an attempt to “blackmail” the government.
He wants to know whether Cowen asked him on what authority was he suggesting Ireland foist the debts of the banks onto the shoulders of the Irish people.
“The question of a programme was something the Irish government saw as their duty to undertake anyway,” Cowen says.
“We needed to show to the international community – investor community as well as everyone else – that we were serious about getting our finances [in order] and continuing to move down a path we had started.”
He says he has heard a lot about Ireland being dictated to.
“We had things to do in our interests regardless of what others thought of it,” he says.
In terms of the pressure that was being put on Brian Lenihan in the run-up to the bailout, Cowen says he can’t understand why it was exerted.
“We weren’t going to renege on our responsibilities but we needed a small bit of room and time,” he says.
“In Brian Lenihan they had a very credible minster for finance who was making budgetary adjustments that were greater than any other EU country.”
He says Lenihan was “frustrated and treated somewhat unfairly” by his colleagues.
“He had a soul mate in me in terms of the frustration,” Cowen adds.
18:06Cowen says he asks himself “privately” every day whether there was more he could have done to avert the crisis.
Cowen says he met with the Financial Regulator just twice in the four years he was Minister for Finance.
Pearse Doherty is a little unimpressed with that given he played golf with Sean Fitzpatrick and had dinner with Anglo executives within the space of a few weeks of each other.
Cowen: I ask myself on many occasions, what did I miss and should I have missed it.— Mary Regan (@MaryERegan) July 8, 2015
The phrase “least worst option” just reared its head again.
I should point out that Cowen has insisted all along – both today and last week – that there should be no political interference in regulatory matters.
So while it may sound crazy that he only met the regulator twice, he seems to be of the view that he had no role in that regard.
Kieran O’Donnell wants to know when Cowen “first realised” Ireland would have to go into a bailout programme.
“When did I first realise it?” Cowen asks.
“When did you, as Taoiseach of Ireland, yourself, in a quieter moment, say ‘we are going to be going into a bailout programme’,” replies O’Donnell, who seems like he might start strumming a guitar any second.
“Well when Brian Lenihan was able to say said to me ‘we can go into this bailout programme and there is conditionality there we can live with or which reflects where we’re at in terms of our own economic planning’.
“Then I said obviously we can do it because there was no point into a programme if you can’t complete it.”
O’Donnell wants to know the date.
“Mid to late November,” Cowen says.
Cowen has said that the NTMA were “outside the door” when the meeting that led to the bank guarantee was taking place.
He says he didn't know who was outside the door “until they came in”.
Committee chairman Ciaran Lynch has pointed out the NTMA were pro-nationalisation rather than the implementation of a guarantee.
The breakdown, Cowen agrees, is that Lenihan, the NTMA, and Department of Finance assistant secretary general Kevin Cardiff wanted nationalisation, while the bank guarantee was favoured by Cowen himself, Central bank governor John Hurley, and the Department of Finance secretary general David Doyle.
The position of the NTMA was relayed at the meeting, he says, but there was no representative present.
A lot of talk on Twitter that it is simply not credible Cowen played golf with Sean Fitzpatrick, and went to dinner with Anglo executives, and did not talk about the state of Anglo and the banks.
It’s worth pointing out that if it was unethical to discuss banking during those engagements, then there is a credible reason for such discussions not to have taken place.
That’s not to say he didn’t do it – but it’s not beyond the beyonds that a government minister would behave ethically.
I guess it’s the timing of those engagements that would make you wonder.
19:11Under questioning from Fianna Fail finance spokesman Michael McGrath, Cowen says there was no “handover meeting” with incoming Taoiseach Enda Kenny in relation to what was waiting for him in his inbox.
He says he can recall saying to Kenny on his last day in the Dail that “we needed to complete the job we had begun”.
He says he was “under no illusions" that FF would be back in power but he thought the incoming government "needed to follow through” on the measures to bring about fiscal stability.
McGrath has asked him about comments made in the Dail on March 31st, 2010, by then Labour Party leader Eamon Gilmore, in which he accused Cowen of “economic treason” for including Anglo in the guarantee.
McGrath quotes Gilmore as having said: “I believe the Taoiseach and the government made the decision not in the best economic interests of the nation, but in the best personal interests of those vested interests that I believe the government was trying to protect on that occasion, and whose property interests and prosperity were bound up with the fortunes of Anglo Irish bank”.
McGrath has asked him how he “reflects” on that now.
“I think it’s well known how I reflected on it a the time, and it remains my position that it is not correct and that it is not true, and I would like to see it stricken from the record in the interests of the public service I've sought to give over a long period of years,” Cowen says.
19:30He says there is “no doubt” people around the ECB were “speaking out of turn” and were not “according the respect to the Irish government that I would expect”.
19:32Matters have been brought to a close, and Cowen now has the chance to make some closing remarks.
He says his evidence represents his “considered opinion” on the matters being discussed.
The “improved prospects” for the country would not have come about without the efforts of the Irish people themselves.
He says he wants to reiterate again “that what motivated me throughout all my political career was to serve my country and its people to the best of my ability”.
He says it is his “fervent hope” that they accept he “never compromised [his] political integrity or breached the public trust in the performance of [his] duties as a minister or as Taoiseach”.
Concluding, he says: “To hold the office of Taoiseach, I regard as the greatest honour. I did my duty as I saw it. It was my privilege to serve.”
So that’s that then.
Two long days that produced in the region of ten hours of evidence apiece from Mr Cowen have ended.
See irishtimes.com for reports and analysis on today’s proceedings.
Thanks for reading.
This event has now ended
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