Banking Inquiry

Rolling updates from Kevin Cardiff's evidence

Colin Gleeson Thu, Jun 18
 
LIVE: Banking Inquiry

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  • 09:48

    Good morning. My name is Colin Gleeson and I will be manning the Irish Times live blog of former department of finance secretary general Kevin Cardiff’s evidence to the banking inquiry today.

  • 09:49

    Mr Cardiff was in charge of the banking unit in the department at the time of the Bank Guarantee in September 2008 and is believed to have played a key role in those historic late night discussions.

    He subsequently went on to hold the position of secretary general at the department from 2010 to 2012.

    Mr Cardiff’s evidence has already been the subject of much furore after his witness statement was leaked and published in a Sunday newspaper. That matter has been referred to the Garda.

  • 10:20

    Sorry for a slight delay there. The technology let me down but we’re away now.

     

    Mr Cardiff, in a lengthy opening statement, has done his upmost to get people excited about this morning’s hearing.

     

    “People have asked me over the years why I haven’t been talking,” he said. “It’s because I’ve been waiting for this committee.”

  • 10:23

    Straight down to business then, dealing with the question as to whether the Bank Guarantee was necessary.

    Mr Cardiff has said he is “very clear” in his own mind that something had to be done.

    “Whatever had to be done it had to be very significant.”

    There was “every possibility” of a run on Anglo Irish Bank.  

    “It wasn’t about getting the right situation, it was about getting the situation which was least likely to lead to disaster,” he added.

  • 10:24

    Even now, he said, he is not convinced it was the wrong thing to do.

  • 10:26
    Mr Cardiff has also denied the banks received a “bailout”.

    “It was money lent - not money given - but we can call it a bailout for these purposes,” he said.

    Can’t imagine that going down too well with Joe Higgins.
  • 10:33
    “It was clear that Anglo was entirely out of cash and that Irish Life [&  Permanent] would most likely be in the same boat later that week,” he said.
  • 10:39
    Senator Susan O’Keeffe is now questioning Mr Cardiff.

    She has asked him about his submission that then-Taoiseach Brian Cowen raised the idea of a broad guarantee early in the discussions on the night of September 29th 2008.

    “My recollection is he started along the lines of: ‘Look, we have a problem. We need a good broad solution that has a real chance of changing the trend - of doing one big job that will be somewhat comprehensive.’”
  • 10:43
    Ms O’Keeffe has asked Mr Cardiff about whether he can corroborate claims that Brian Cowen had said “we’re not f-ing nationalising Anglo”.

    “It would be a lie to say that I never heard the Taoiseach use the F-word,” he quipped back to laughter in the public gallery.

    “But I don’t remember that turn of phrase.”
  • 10:48
    Ms O’Keeffe concluded her time with the question as to whether Mr Cardiff believes Anglo Irish Bank “had an influence on the Taoiseach” in terms of going down the nationalisation road.

    After a long pause, Mr Cardiff replied that he had “dealt with him for a long time”.

    “I believe he was influenced, as anyone should be, by information that came to him, by discussions he had. Was there some special influence there? I never saw it.

    “I still think the man was trying to do the best for his country and not for anyone else.”
  • 11:04
    Sinn Fein finance spokesman Pearse Doherty has now begun questioning Mr Cardiff and he wants to know what information he had in relation to Anglo Irish Bank when the bank’s officials said they were going to run out of money the following day.

    Mr Cardiff said it was a build-up of information. The Central Bank and the bank itself had relayed this position, he said.
  • 11:20
    Mr Doherty has asked whether there was contact with ECB president Jean-Claude Trichet around the time of the guarantee.

    Mr Cardiff said that according to his notes, Central Bank governor John Hurley had a conversation with Mr Trichet on either the 28th or the 29th September 2008.

    “John said, ‘look we are going to have significant trouble in the next few days.’

    "The message back was ‘look at what we’ve been discussing…Ireland has to look after its problems.’

    "The message back was ‘you have to make sure your own banks are dealt with by your own government’. That’s my recollection of the message.”
  • 11:29
    Mr Doherty has queried Mr Cardiff’s submission that Brian Lenihan “didn’t trust” at least one of his Cabinet colleagues in terms of keeping information confidential.

    “There was a concern…there was that sense,” Mr Cardiff said.

    This issue led to Mr Lenihan being coyer with the Cabinet than he might otherwise have been, suggested Mr Cardiff.

    “It had implications for democracy,” he said. “Cabinet has to be kept informed…[and] briefed informally as things were developing.

    “I’m not sure he was doing that…I’m not sure they were hearing all those things at the time.”

    He added that he doesn’t believe there was “any malicious intent” on the part of Mr Lenihan.
  • 11:39

    Mr Cardiff has also revealed that, prior to the guarantee, businessman Dermot Desmond contacted him and called for it to be introduced.

  • 11:40
    Fianna Fail finance spokesman Michael McGrath has asked whether there was a lack of skilled economists in the Department of Finance.

    Mr Cardiff said there were “fewer than we would have liked” but that he doesn’t believe this brought about the crisis or contributed in any serious way.
  • 11:48
    The inquiry is now going into private session until 12.05.
  • 12:25
    Joe Higgins has asked Mr Cardiff about his level of preparation for today’s hearing and whether he has spoken to officials in the Department of Finance for it.

    Mr Cardiff isn’t too enamored with the question.

    He says it isn’t within the terms of reference of the inquiry to ask who he meets with.

    He says it is a “strange question” and that he received “very little advice” from the committee in terms of preparation for his appearance.

    Committee chairman Ciaran Lynch intervenes to say every witness has been treated the very same by the committee.

    Mr Cardiff says he has done “a great deal” of preparation that “started long before Christmas”.

    “I think I’m doing okay in terms of information flow,” he added.
  • 12:38
    Asked by Mr Higgins whether Brian Lenihan was “over-ruled” by Brian Cowen on the night of the Bank Guarantee, as has been speculated, Mr Cardiff said he had tried to answer that question as best he could in his statement.

    “They had a meeting that I wasn’t in so I don’t know what happened,” he said. “I can only tell you what the minister said and he didn’t put it in the form of over-ruling."

    He said he has “tried to avoid hearsay”.

    “It would be unfair to say any more,” he added.
  • 12:47
    Fine Gael TD Eoghan Murphy has asked whether any decision was made in relation to the guarantee at the Cabinet meeting held the day before it was introduced.

    “There was no formal decision and if there was an informal decision, we weren’t told about it,” said Mr Cardiff.
  • 12:59
    Committee chairman Ciaran Lynch has asked whether there was any move from the Department of Finance to “pull back from the exposures we had” in terms of the economy’s reliance on the construction sector.

    Mr Carddiff said there was “no specific advice from me”.

    “Most people who saw the crash coming saw it too late to be in a postion to undo most of the damage,” he said.

    “We were on the cliff and the wind was blowing. How do you climb down off the cliff without precipitating a crash?”
  • 13:04
    My Lynch also asked whether there was any research done to back up the “soft landing theory” within the Department of Finance.

    Mr Cardiff said he could not say “one way or the other”.

    He also said he didn’t believe the term ‘soft landing’ was used widely at the time, and that the theory “wasn’t that soft”. It was “quite a bump”.
  • 13:05
    Talking about the night of the guarantee, Mr Cardiff said the last phone call he made was at 4am.
  • 13:14
    Fine Gael TD Kieran O’Donnell asked Mr Cardiff for the basis of his belief at the time that Anglo Irish Bank should be nationalised.

    Mr Cardiff said he “thought they were shot”.

    This was “not in terms of solvency but in terms of future business” due to the bank’s reliance on lending to the construction sector.

    “Who were they going to lend to?” he asked. “What was their business going to be in two years time?”

    Asked who else favoured nationalising the bank on the night in question, he said “just myself and the Minister, and, later on, just me.”

    He added: “I don’t know even now if I was right but that was my position.”
  • 13:33
    Under questioning from Senator Sean Barrett, Mr Cardiff said there were “some reasonable concerns” in relation to the guarantee.

    He, however, dismissed the narrative that the events of that night were entirely a case of muddling through.

    “There was a huge amount of preparation,” he said. “We didn’t just turn up unequipped. A lot of work had been done.”
  • 14:00
    He said that has they had “a perfect foresight” of what was going to happen, they “would have acted faster, differently and more aggressively”.

    On this issue of burning bondholders, he said: “Then you need to talk about major constitutional issues that we didn’t see any way around.”

    The idea that there was a “magic solution” is “not fully tenable”, he added.
  • 14:04
    Mr Cardiff was also asked about Mr Trichet’s denials to the Banking Inquiry that he directed the government not to allow a bank to fail.

    Mr Cardiff said there were apparently “two conflicting accounts” in relation to the matter.

    “One from Mr Trichet himself,” he said. “One is my recollection of what the governor of the Central Bank told us, and mine is backed up in writing.”
  • 14:16

    Senator Susan O’Keeffe asked Mr Cardiff whether either Taoiseach Brian Cowen or Minister for finance Brian Lenihan has sought advice external from his their advisors and civil servants.

    Mr Cardiff replied: “Not on the night.”

  • 14:17

    There was “no agenda” to keep bad news out of the room, he said.

  • 14:22

    Pearse Doherty has returned to the issue of individuals who lobbied for the guarantee, or “individuals who may have made their views known”.

    He asked specifically about JP McManus and Denis O’Brien.

    “I have no record whatsoever, nor any recollection whatsoever, in terms of those names,” said Mr Cardiff.

  • 14:28
    That concludes the evidence of Mr Cardiff to the Banking Inquiry today. He is due to return next week to give evidence in relation to other matters.

    Thanks for reading and see irishtimes.com for news reports by Ciaran Hancock on today’s hearing.