Cowen at Bank Inquiry

Ex taoiseach giving evidence on time as minister for finance, says won’t ‘attempt to pass the buck’

Colin Gleeson Thu, Jul 2
 
LIVE: Cowen at Bank Inquiry

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  • 09:16

    Good morning! The Banking Inquiry continues to rumble on today and – let’s face it – is only now starting to deal with some of the more substantive issues surrounding the collapse of Ireland’s banking system.

    And by substantive, I mean juicy.

    Or at least as juicy as you can reasonably expect a banking inquiry to be.

    I wouldn’t be expecting Sex and the City in here.

  • 09:17

    My name is Colin Gleeson and my job today is to steer you through the evidence of former taoiseach Brian Cowen.

    Cowen was of course Taoiseach on the night of the bank guarantee, but today’s evidence is to focus on his time as minister for finance from September 2004 until his appointment as Taoiseach in May 2008.

    Mr Cowen is to appear before the committee again next week, when the focus will be on his tenure as Taoiseach.

    It’s fair to say that Mr Cowen has largely kept his own counsel since stepping down as Taoiseach, and having been very much in the engine room in the years preceding the crisis and on the bridge when it all hit the fan, he is very much one of the inquiry’s star witnesses.

    Following Charlie McCreevy’s evasive performance yesterday, I wonder whether we can expect more fireworks today from a man who – in spite of it all – is still regarded as a formidable politician.

  • 09:25

    Mr Cowen’s evidence will take up the entire day today. The first session, which is starting shortly, is due to run until 1pm, but I will eat my proverbial hat if it finishes on time. The morning will focus on Mr Cowen’s tenure as Minister for Finance, from his appointment until the general election in 2007.

    The afternoon session is to run from 2.30pm until 6pm and will focus on the period from the general election in 2007 until his appointment as Taoiseach in May 2008. So I imagine we’ll be lucky to have things wrapped up by 7pm. It’s going to be a long day.

  • 09:27
    If you’d like to comment on today’s proceedings or get involved in the discussion, you can tweet me @ColinGleesonIT and I will publish it here.
  • 09:28

    Much like in the case of former Department of Finance secretary general Kevin Cardiff a couple of weeks ago, Mr Cowen’s opening statement to the inquiry was leaked to the Sunday Business Post and has been widely reported since.

    Cowen is expected to confirm that he overruled Brian Lenihan on the night of the bank guarantee in 2008.

    It’s believed he will say he held a private meeting with the then minister for finance on the night of September 29th, 2008.

    He's also expected to tell the committee it was not a confrontational exchange, but Mr Lenihan did favour nationalisation of Anglo Irish Bank.

  • 09:37
    We’re still waiting for this morning’s session to begin, but it should be any minute now.
  • 09:42

    Right, we’re away.

    Cowen is taking the oath.

    He’s wearing a red tie.

  • 09:45

    He is now delivering his opening statement.

    He has prepared two – one for today’s hearing and another for next week’s hearing.

  • 09:47

    First things first, he says his government “dealt with the financial crisis to the very best of its ability”.

    That being said, as head of government, he accepts “full and complete responsibility” for what happened.

    He is sorry “for the hardship and stress caused to many people”.

  • 09:50

    The exercise, he says, is not just about apologies and regrets.

    He wants to deal with the committee’s questions in as “objective and non-defensive a manner as possible”.

    He also wants to dispel some of the assertions that have been made by people for "personal and political motivations".*

    *See earlier reference to ‘juicy’.

  • 09:51

    He says the government “did not have the benefit of hindsight” in terms of the bank guarantee.

    Didn’t take long to get that in...

  • 09:51
    “Nothing I have to say here should be interpreted by anyone as an attempt by me to pass the buck to anybody else,” he says.
  • 09:53

    The regulatory system “failed completely” and the guarantee was the most decisive step the government could take on that night.

    It was “clear we were on our own”.

    They had just “one shot at it” and if they got it wrong, “we were told Ireland would be sent back 25 years”.

    “We had to go with the best decision we could at that time,” he says.

    “Nationalising Anglo was not a simple solution...and it is becoming increasingly clear to people that there were no cost-free solutions.”

  • 09:56

    On to his time as Minister for Finance now.

    "Those who suggest I did nothing to curb the property spiral specifically ignore the fact that in presenting my 2006 Budget, I announced the most radical abolition of property based tax incentives made by any recent Minister for Finance."

  • 09:58
    On stamp duty, he says that in late 2006 and up to the General Election in June 2007, he was “the subject of sustained criticism” for his decision as Minister for Finance to “resist widespread demands to abolish or dramatically reduce stamp duty on property”.
  • 10:00

    At the time, he says, he “accepted that the levels of stamp duty in Ireland were among the highest in the world” and that this meant “real consequences for people buying houses”.

    “While I agreed that some adjustments were appropriate, I realised that the high levels of stamp duty were a break on the escalation of property prices and acted as a disincentive to greater property speculation.

    “I felt that calls for the abolition or serious reduction of stamp duty were simply irresponsible in a context of rapid property price growth.”

    He therefore “strongly resisted such demands”.

    There is no doubt abolishing/reducing stamp duty at that time would have been “politically popular”.

    “But it also would have increased the vulnerabilities of the banking system and the Irish economy to overvalued property,” he says.

    “I therefore refused to go down this route. I was subject to much criticism for this. It is hardly surprising today that the cheerleaders for the abolition of stamp duty, or its radical reduction, are now silent on what would have been the impact on property prices or the resultant impact on the scale of banking crisis had I heeded their calls.”

  • 10:04

    In terms of prudential policy, he says that by the summer of 2007, the Central Bank’s report noted that growth in credit “had started to abate”, and as had house prices.

    “This was viewed as being evidence of an incremental steadying of the market.”

  • 10:05
    He says that it is his belief that had there been “more robust, independent work and scenario planning” undertaken by both the Central Bank and the Financial Regulator regarding the banking system, this would have “informed the silently evolving risk scenario and enabled the Central Bank, the Financial Regulator and the Department of Finance to develop timely, strategic interventionist policies and strategies”.
  • 10:06
    There was “clearly a culture of deference” in operation between the Financial Regulator and the financial institutions it was regulating.
  • 10:07

    He says he agrees with the findings of the Nyberg Report which asserts that the policy apparatus was “complacent”.

    “As Minister, I should also have been more doubting, more questioning by challenging the broad consensus of opinion that had developed on these matters,” he says.

  • 10:07

    There is “no doubt” that while international factors were a “critical component” in the crisis, it would be “wrong not to accept that the crisis was made worse for Ireland because of internal factors”.

    There were “vulnerabilities built up” within the banks: property prices were “overvalued” and there had been a “gradual loss of competitiveness in the Irish economy”.

  • 10:09
    Mr Cowen has also said he was “not aware” of contrarian views within the Department of Finance which differed in substance from the Department’s overall assessment of the economy.
  • 10:11

    Regarding external contrarian views, the most notable was a research paper by Professor Morgan Kelly of UCD which was published by the ESRI in July 2007.

    Mr Cowen has pointed out that in an interview on publication of the review, ESRI economist Dr Alan Barrett “made it clear” that the ESRI did not share Prof Kelly’s prognosis that house prices in Ireland over the following eight years could drop between 40% and 60% in value.

  • 10:12
    Prof Kelly’s “more pessimistic view proved to be more accurate as we now know”.
  • 10:20
    He says that “at no point” during his time as Minister was it thought by the authorities “that any of the banks were facing imminent underlying solvency risks or that there was a fundamental risk to the entire financial system in Ireland”.
  • 10:20

    In terms of the relationship of the Department of Finance with the banking sector and the property sector, he says it was “primarily through their federations”.

    Namely, the Irish Banking Federation (IBF) and the Construction Industry Federation (CIF) .

  • 10:20

    Individual banks dealt with the Department through contact with the relevant officials, he says.

    His own interaction with banks was “seldom and infrequent”.

    Every year the Minister for Finance receives “many pre-budget submissions” in writing from economic and social actors including the IBF and CIF.

    The main groups would be met every year by the Minister for Finance at meetings attended by officials where oral presentations “would amplify the written submissions put forward”.

    The incumbent Minister for Finance would always be a guest speaker at IBF annual dinners or an industry awards ceremony.

    In his time as Minister for Finance, he says he regarded his relationships with these two sectors as being “appropriate”.

    Their access to the Department was “in no way different” from how other organisations of economic importance were dealt with.

  • 10:22

    That concludes Mr Cowen’s statement, but they’re off again.

    Committee chairman Ciaran Lynch is straight in there with a question that asks Mr Cowen if he believes he was “appropriately skilled for the job”.

  • 10:25

    Cowen has listed off a load of stuff from his CV basically.

    He says he had been in cabinet since 1992 and was a minister for labour that involved working with social partnership.

    He says he’s not a qualified accountant, “which probably would have been helpful”.

    “It was a question of political leadership,” he says.

    “I obviously I felt I was qualified.”

  • 10:26
    Already some tetchy exchanges between Cowen and the committee chairman in relation to the inquiry’s methodology, but good humoured I would say.
  • 10:33

    My Lynch has asked that given his resistance to tampering with stamp duty, was he was “informed in advance” of an interview given in 2007 by then Taoiseach Bertie Ahern to the Sunday Independent in which he announced reform of stamp duty in the event the government was returned.

    “I was delighted he didn’t go as far as Labour and Fine Gael at the time, which was a crazy proposition,” says Cowen.

    You can tell this is going to be one of the more entertaining days at the inquiry.

    “The question I asked was whether you were informed in advance,” persists My Lynch.

    “Oh absolutely, we were very close then,” says Mr Cowen.

  • 10:43

    Fine Gael TD Kieran O’Donnell is asking Cowen if he believes the policies he pursued contributed to the property bubble and the ensuing crash.

    Cowen says he agrees that a property bubble formed on his watch.

    He then proceeds to list off some of his attempts to keep the show on the road, but Kieran O’Donnell thinks he’s waffling.

    “Time is limited,” he tells him.

    “I can stay here all day,” Cowen replies.

    God help us.

    “My time is limited,” says O’Donnell. “Yours might not be but mine is.”

    Committee chairman Ciaran Lynch has used his gabble and he says it’s the first time he’s had to since the inquiry started.

    I told you there’d be drama.

  • 10:44

    Now O’Donnell is complaining that his time is running out.

    “You’d have more time if you stopped talking about your time,” says Mr Lynch.

    Classic.

  • 10:48

    After some robust questioning regarding general policy, Cowen has again digressed somewhat by pointing to Fine Gael and the opposition’s rhetoric at the time, which was admittedly calling for the same wrong policies except to a greater extent.

    Mr Lynch tells him that Enda Kenny will appear before the inquiry in due course and Fine Gael will be scrutinised at that time.

    Cowen is not happy.

  • 10:56

    He is asked about the "cyclical nature" of budgets from 2005-2007 and the fact that he “had this massive increase in expenditure”.

    “I’ve explained why,” he says.

    In order to underpin the economy, he wanted to “invest in skills, people and infrastructure”.

    He says he doesn’t agree with the narrative that has formed that it was all “washed down the drain”.

    “Those investments are paying today in spades.”

  • 11:02

    Kieran O’Donnell uses his last question to either try and grab a few headlines for himself or twist the knife.

    He asks: “What do you say to the young people who have bought mortgages, and are now in negative equity, or who have lost their houses...” etc.

    Cowen nearly has a conniption.

    “I’ve made very clear in my speech how I feel about that,” he says.

    Which, to be fair, he has.

    “You have no monopoly on upset or seeing people in distress,” he continues.

    “I have nothing but the greatest sympathy for people in that situation.”

    He’s actually winding himself up the more he deals with the question. It’s fair to say he saw through what it was designed to elicit.

    Ciaran Lynch feel the need to intervene.

    “What we’re not looking for here is polemic engagement,” he says. “We’re looking for questions and answers.”

     

  • 11:04
    Joe Higgins is up. Hold on to your hats.
  • 11:14

    Higgins is asking about the role of the IFSC.

    “The whole problem of this crisis has been the misjudgement of risk,” says Cowen.

    He disputes the narrative that the IFCS was all about “funny money and all the rest of it”.

    “The problem was on the main street in our own retail banks,” he says.

  • 11:19

    Higgins is doing most of the talking here.

    He’s been waiting years for this to be fair.

  • 11:27

    Higgins is quoting a speech Cowen gave years back to some banking function. Apparently Cowen told them they were the “players on the field” while he was an “ardent supporter” on the sidelines who would “continue to wear your colours”.

    He tells Cowen he was “wearing the bankers’ colours”.

    Ciaran Lynch intervenes to tell Joe that he is getting into value judgments, which he’s not allowed to do in here.

    Joe isn’t listening.

    “I’ll have to suspend proceedings if you don’t listen to the chair,” says Lynch.

    “Avoid the polemic value judgments if you please.”

    Cowen defends his position, basically saying that to some extent he had to butter them up.

    “I’m a backer of the 32,000 jobs down at the IFSC,” he says. “I’m in favour of people of action who went and did something for this country.”

  • 11:38

    Joe Higgins has asked Cowen about his relationship with big business and the construction sector, and whether it ever influenced policy.

    “You couldn’t get a winner in the Galway tent Deputy, never mind anything else,” says Cowen.

    He says that other parties have “do’s” in Punchestown and there is “not a word about it”.

    “This was a fundraising thing that was done over many years,” he says. “A hospitality thing you might call it.”

    He says he didn’t see much use for it himself so he ended it when he became Taoiseach.

    Seems like he’s been waiting to get this off his chest for awhile.

    He says a “mythology of big meetings and contracts being signed” in the tent has formed.

    “Why would you bring the media in if that was happening,” he asks.

    “It’s all nonsense.”

    It was “no big deal” but allowed people “to set up this contact equals collusion backdrop that goes on” in politics.

    “Have people in that sector influenced me as minister for finance? No is the answer. I’m my own man.”

  • 11:41

    Ciaran Lynch has stopped the clock to give Joe Higgins a proper talking to about his value judgments.

    He says: “If you want to have political discussions, go in the Dail or out to the plinth.”

    Apparently it’s a lovely day out there.

  • 11:41
    With that, they’ve decided to take a coffee break. We’re back in ten.
  • 12:05
    They're still not back from their coffee break so here's a picture of Cowen arriving this morning.
  • 12:06
  • 12:15

    We’re back again and independent senator Sean Barrett is up.

    He is asking Cowen about his assertion that the Department of Finance did not see its role as second guessing the Central Bank and the Financial Regulator.

    “They are independent and that independence has to be respected,” says Cowen.

    He is “not saying you can’t have oversight” but at the same time “you can’t have political interference”.

  • 12:23

    Fine Gael TD John Paul Phelan has asked Cowen to “briefly characterise your own time as Minister for Finance”.

    “I look at the budgets I passed,” says Cowen. “I’m happy with the initiatives I introduced. It was a more socially inclusive way of doing things.

    “Obviously, with hindsight, we would do things a little differently, clearly.”

  • 12:33

    Mr Phelan has asked about the range of options that were drawn up by the Department of Finance, and what plans were drawn up to deal with each of these scenarios.

    Specifically, he’s talking about the possibility of a “hard landing”.

    “What you do is you ally the assessment of risk with what is happening on the ground and all the advice. You accommodate that in your budget and that’s what we did.”

     

  • 12:39

    Mr Lynch has asked whether with regard to either a soft or hard landing, is he aware of any testing or modelling that was done by him or the department?

    “Not external testing by the IMF or ECB - you or your officials,” he reiterates.

    Cowen says that this was work which would be done by the department “in the context of budgetary preparations”.

    When everyone is using the “same data and same timeframe” however, you get “a convergence of opinion”.

  • 12:40
  • 12:46

    Fianna Fail senator Marc McSharry has asked whether there was a policy of “don’t scare the horses” when it came to the IFSC and enforcing prudential policy.


    “I don’t think so,” says Cowen.


    He goes on to say that Ireland has “often been described as a tax haven”.


    Even people in this country have had the gall to say it, he says.


    “This is a properly regulated international financial services centre,” he says.

  • 12:52

    Mr McSharry has asked whether social partnership framed the budgetary processes and whether it served us well.

    Cowen says it has become “very fashionable” to run down social partnership.

    “I remember the eighties and how difficult things were,” he says. “I think the methodology we used then was the right way to go and is the right way to go.

    “We have working people. We have educated people in this country. We don’t have a classist society. We have a sense of community.”

    I can’t see Joe Higgins but I imagine he has just fallen out of his chair.

    “It did work for this country,” says Cowen. “It put everyone on the same page without compromising themselves.”

  • 12:54
  • 13:05

    Fianna Fail finance spokesman Michael McGrath has asked about the Central Bank.

    The former governor John Hurley is a “straight shooter”, Cowen says.

    “I believe he gave me the considered view of the board. He mentioned downside risks.”

    Hurley “wasn’t in there buttering me up or telling me what I wanted to hear”, continues Cowen.

    “He was a good public servant. He let me know what he believed the Central Bank position was.

    “The Central Bank never said there was no problem.

    “He would give in my opinion an accurate view.”

  • 13:08

    In terms of electioneering, Cowen admits that it does go on.

    “Going into a budget, look, I’m not going to be foolish to the Irish public and say it wouldn’t be a consideration in an election year. That’s nonsense. At the same time, I believe we acted in a responsible way.”

  • 13:13

    A lot of talk on Twitter about how well Cowen is doing here. I can’t say it’s surprising. He was always an excellent debater and has a great knack for cutting through the bullshit.

    Just a shame about the whole crash thing.

  • 13:18

    Sinn Fein finance spokesman Pearse Doherty has begun questioning Mr Cowen.

    This should be good.

  • 13:30
    “What did you personally do as minister for finance when you saw an explosion of credit in the finance markets and a massive increase in property prices,” asks Mr Doherty. “What did you do to curtail the property bubble that formed during your time as minister for finance?”


    Cowen is not happy with where he’s going.


    “You’ve suggested that there was an easy alternative, which there wasn’t,” he says.


    “Everyone was asking me to reduce stamp duty. The opposition who are now telling me we were spending too much said they were going to reduce it for everybody.”


    Ciaran Lynch again intervenes to tell Cowen “to focus on your actions, not the opposition or anybody elses”.

  • 13:36

    Doherty is back at him again.

    “Listening to you Mr Cowen, I have to ask you this question,” he says.

    “Do you believe that your policies during your time as Minister for Finance, helped to develop and sustain a property bubble in this country?”

    Ooh. He won’t like that.

    “It didn’t set out to develop and sustain a property bubble,” replies Cowen. “It set out to ensure we could ease the bubble back on a soft landing projection, as was being suggested would happen.”

  • 13:40

    Pearse isn’t satisfied.

    “Did you policies help develop it, was the question,” he says. “Did you your policies help develop the property bubble?”

    “Our policies were not designed to create a property bubble,” replies Cowen, unsurprisingly.

    He has his hand in the air now and he’s pointing a finger.

    “I said earlier that the property bubble happened during my time as minister. I’ve no problem saying that. That’s a fact...I’m not trying to move away from that.”

  • 13:42

    There are raised voices now and committee chairman Ciaran Lynch once again intervenes to try and calm things down.

    “I know you all want your lunch and get cranky, but we have to get through the day’s work we have to do,” he says.

  • 13:53

    Cowen has touched on the company he keeps, remarking that his close friends are “mundane” and “not that well known”.

    Well I never. Bit harsh I would have thought.

  • 13:55
  • 14:01

    Fine Gael TD Eoghan Murphy is having his go now.

    He wants to know if Cowen accepts Ireland failed the test of prudent fiscal management.
    There’s a bit of back and forth between them.

    Murphy doesn’t think Cowen has answered his question, and, subsequently, that he has answered a different question.

    Eventually Cowen says something that they seem satisfied with.

    “We obviously have failed the test on the basis of the outcome,” he said. “But at the time we were pursuing a policy which we believed to be prudent. In the absence of a once-in-a-century event it would have been prudent.”

  • 14:03
    We’re already an hour over time with this morning’s session. I’ve a dentist appointment next Tuesday that I fear may be in jeopardy.
  • 14:12

    Fine Gael senator Michael d’Arcy has asked whether he considered introducing a property tax to cool the market.


    He has pointed out that on Cowen’s watch the State went from a level of indebtedness that was below European average to the highest in the OECD.


    Cowen says that people make “personal decisions in a democratic society”.


    Before anyone can lose the rag, he qualifies that with: “They believe there is a future there that will allow them to repay this...unfortunately that didn’t happen.”


    He says a property tax was “never considered”.

  • 14:14
    Apparently Ciaran Lynch is going to try and wrap things up soon.
  • 14:29

    Mr Lynch is asking about the property bubble again and wants to know what Cowen did about it.

    Cowen helpfully points out that the answer to rising prices is to increase supply.

    In this case, Lynch replies, the laws of supply and demand did not seem to apply.

    Supply and demand is “a basic economic fact of life”, says Cowen.

    “But that didn’t happen,” says Lynch.

    “Well it didn’t happen because there was a basic dislocation between where the houses were built and where the demand was.”

    How embarrassing.

  • 14:30

    Cowen says he “wasn’t promoting high prices”.

    “I was saying to this industry, can we get houses built where the demand is needed.”

    Getting demand met was “the crucial issue”, he adds.

  • 14:35

    Fine Gael TD Kieran O’Donnell has started quoting Morgan Kelly again.

    He wants to know what Cowen thought of his assertions at the time.

  • 14:39

    Cowen references ESRI economist Dr Alan Barrett again, who did not share Kelly’s analysis, and says the department’s view “was more constant with Dr Barrett’s view” than it was with Kelly’s.

    “What was your own reaction,” persists O’Donnell.

    “I thought it was pessimistic,” says Cowen. “Very much a worst case scenario.”

    He says there was “very much a consensus of opinion against him” and that he was “an outlier”.

    He adds that “normal deduction you make when you assess opinion” involves “veering towards what everything else is saying”.

  • 14:41

    With that, it’s lunch time.

    Proceedings will resume at 3.40pm when we do it all over again.

    The focus will now move to the period from the general election in 2007 until his appointment as Taoiseach in May 2008.

  • 15:38
    Second session now due to start at 4pm.
  • 16:12
    And we're back...
  • 16:24

    Fianna Fail finance spokesman Michael McGrath is questioning Cowen on why there was no insistence on the part of the authorities that they go into the banks and check their “underlying financial stability” during the early stages of 2008.

    Cowen says issues with the banks at the time weren’t viewed as a systemic threat.

    McGrath puts it to him that the former department of finance secretary general Kevin Cardiff said the absence of greater inspection of the banks at that point was “a failure”, and asks Cowen whether he would accept that.

    Cowen says that if Cardiff said that, it’s good enough for him.

  • 16:26
  • 16:32

    They’re talking about Anglo now.

    McGrath is asking about Cowen’s attendance at a private dinner in the headquarters of Anglo Irish Bank on April 24th 2008.

  • 16:37

    “How did it come about,” asks McGrath.

    “How that came about was I was about to leave the department of finance at that stage...I had never met them and they felt it wouldn’t be right if I didn’t met them before I left office.”

    Cowen says the dinner was “informal”.

    McGrath wonders whether, in light of the fact the bank’s share price “had a taken a whack” in the months before, and in light of Sean Quinn having amassed a large stake of CFDs in the bank, it was “wise and prudent” to have attended the dinner without an official from the department of finance.

    “Predecessors of mine have been at many more private dinners than I’ve been at,” replies Cowen.

    “It was just a question of attending a dinner at their request,” he says.

    No business was done.

    McGrath also wonders whether the pressures faced by the bank at that time were discussed at the dinner.

    “No not at all.”

  • 16:41

    McGrath concludes his time by asking Cowen how he responds to the charge that he “mismanaged the economy”.

    Cowen says that in his time, there was practically full employment, a lot of investment in public infrastructure, “which is a critical part of the recovery process we have now”.

    He says there is no minster for finance in the developed world who can say in the aftermath of this crisis that he didn’t have to make “serious changes” to his budgetary strategy.

    “I don’t accept there was mismanagement of the economy by us,” he says.

    “People can have their criticisms of it but there is a very clear policy position behind what we were trying to do.”

  • 16:51

    Fine Gael TD John Paul Phelan wants to talk about the dinner in Anglo again.

    He wants “more detail” as the purpose of it, he says.

    “At the dinner in question, what was discussed?” he asks.

  • 16:56

    Cowen says it would have been “discourteous” not to attend.


    There were some people there he knew, but most of them he didn’t.


    Sean Fitzpatrick was there, whom he had met three or four times previously.


    He says everyone sat down, started talking away informally.


    Later on, someone stood up and talked about Anglo and what it was doing as a bank.


    He says he took no notes and got no documents.


    “I was thinking about other things at that stage – heading away home.”

  • 16:58
    The one and only time he met David Drumm was at the dinner.
  • 17:24

    Phelan has queried the level of funding FF candidates received from the construction and property sectors.

    Did it have any bearing on candidates’ opinions as to decisions government would make at that particular time with regard to property, he wants to know.

    “No,” says Cowen. “I’d have no idea one way or the other.”

    He says it is “just a pure speculative question”.

    He’s a little miffed by this and tries to turn the tables a bit.

    “You’d have to see first if any of them was a member of the government. Were they?”

    Phelan is a little taken aback but he recovers and replies that the figures are “aggregated FF candidates”.

    “If government was making decisions, and they weren’t a member of the government, what’s it got to do with them?” Cowen wants to know.

    Phelan’s not having it.

    “Would other members of the parliamentary party not have an influence on decisions?” he asks. “When you were a minister did you never have a conversation or listen to an opinion from a backbencher or a senator?”

    Cowen looks unimpressed.

    “Of course deputy,” he sighs.

    A wry smile is now beginning to form on his face.

    “I would have thought so,” booms Phelan.

    “Of course,” repeats Cowen and shrugs.

  • 17:26

    Senator Marc McSharry wants to know who makes the final decisions on budget day.

    “When I was minister, I made the final decision on certain matters,” says Cowen. “Obviously I would have the courtesy to speak to the Taoiseach and the Tánaiste beforehand.”

    “Did the Taoiseach need to approve it?” asks McSharry.

    “Constitutionally he doesn’t have to approve it, but it’s usually good if you’re a minister for finance to be on the same wavelength as your Taoiseach,” replies Cowen.

  • 17:32

    McSharry has asked whether there were any contrarian views among the Cabinet about the soft landing theory.


    “I don’t know if it’s possible for me to talk about Cabinet discussions,” replies Cowen.


    Chariman Ciaran Lynch intervenes to clear things up.


    “Matters at cabinet are covered by cabinet confidentiality,” he says.


    “Even if you wanted to co-operate, I couldn’t allow you to commit an offence, Mr Cowen.”


    God forbid.


    But there’s always an Irish solution to an Irish problem.


    Lynch helpfully suggests that “sometimes when a Cabinet meeting ends people drift out into the corridor and continue talking”.


    “You can certainly talk about those things,” he points out.


    “Em, things always got awfully silent once the Cabinet meeting were over,” Cowen replies. “People were busy heading back to their departments.”


    They’re openly laughing about this here.


    “So, no is the answer,” says McSharry.


    “Obviously, when you have 15 elected political operators sitting down in a room there will be different views,” says Cowen.


    He could find himself in Mountjoy tonight for that.

  • 17:51

    Chairman Ciaran Lynch wants to know whether there was any evidence-based document in existence at the Department of Finance that supported the soft-landing theory.

    Cowen says he “can’t recall”.

    There may have been documents but not necessarily owned by the department, he adds.

    Lynch says the inquiry has been hunting this document from day one and he’d love if Cowen could clear things up.

    “I don’t recall seeing a department of finance large tome that said: ‘soft landing, here it is’.”

  • 17:55
  • 17:55
    They're gone for another coffee break but they are expected back very shortly.
  • 18:02

    We’re back and senator Michael d’Arcy is up.

    “Another couple of hours will do you,” he jokes.

    At least I hope it’s a joke.

  • 18:19

    We’re back on those elusive little buggers called contrarian views.

    He wants to know if Bertie Ahern’s infamous comment that people who had concerns about the economy should “go and commit suicide” would have had an effect on people coming forward with contrarian views.

    “I don’t think that had an effect,” he says.

    “In fairness to the Taoiseach he apologised for any offence caused within a very short time after that. It was an off-script comment that he apologised for.”

    He says there is a need for the public service to develop a culture where diversity of views is “not only fostered but encouraged”.

    There was “a culture” that was developed in the department “over a long number of years”, he says

    “That needs to be challenged and was being challenged I’m sure.”

    He says that he himself enjoyed hearing different points of view.

    It would have been “boring” otherwise, and he liked “the intellectual challenge” of trying to reach consensus.

  • 18:26

    There’s a bit of interference with the microphones and chairman Ciaran Lynch interrupts to ask Cowen if has his phone on.

    “Mr Cowen, you don’t happen to have your mobile device switched on by any chance?” he says.

    “I brought it with me without knowing I was bringing it with me,” Cowen mumbles back.

    Explains a lot wha.

  • 18:27

    He wants to know if he’s the “the culprit”.

    Joe Higgins and Pearse Doherty have managed to restrain themselves.

  • 18:40

    Kieran O’Donnell has asked whether he should have adopted a “less expansionary” budget in 2008 when expenditure was increased by nearly nine per cent.

    “Yes, I think I probably should have been less expansionary in that budget, the year after an election,” he replies.

    Good to know that proximity to an election directly affects the purse strings.

    “I think I’d rather have spent a bit less then,” he continues. “It was a new government and issues arose there but...”

    He trailed off there. Shame, I wonder what issues.

    “It’s not the one I’m proudest of,” he says.

    “What would you have done differently?” asks O’Donnell.

    “Spent less.”

  • 19:05
    Labout senator Susan O’Keefe wants to know when Cowen found out about Sean Quinn’s massive Contracts For Difference (CFD) stake in Anglo.
  • 19:11

    For anyone who doesn’t know what CFDs are, they are – among many other things – like shares that you can keep secret.

    Michael O’Sullivan, who was divisional lending director at Anglo from 2005, told the trial of three former Anglo directors that the moment he learned of Sean Quinn’s CFD stake in the bank was “one of those moments that you never forget in life”.

    He said that the CFD holding could potentially destabilise the bank and agreed this could have “potentially disastrous consequences for the entire Irish financial system”.

  • 19:14

    Cowen says he didn’t find out about it from anyone at Anglo, but that it was “probably the governor of the Central Bank” around St Patrick’s Day.


    Ms O’Keefe wants to know what he thought.


    “Obviously it became serious,” he says. “It hit the share of the bank very seriously.”


    He says he told the governor that he would be telling Anglo “to go down and see him about it”.


    He also directed the regulatory powers to get involved.


    Ms O’Keefe wants to know why he didn’t continue to be “operationally involved”.


    “It was a regulatory matter,” says Cowen. “I don’t believe there should be any political interference at all in regulatory matters. That’s a fundamental.”

  • 19:17

    There’s more phone interference.

    Ciaran Lynch thinks that maybe someone, somewhere has Cowen’s dinner ready.

  • 19:23

    It’s winding down now.

    Cowen says the country is “getting back on the right track” and it’s thanks to “the work of successive governments”.

    “I’m also very satisfied the government I led took the right decisions,” he says.

    “The right thing had to be done even if it meant a heavy political price had to be paid.”

    He says he “deeply regrets” the hardship that was caused to many people, but that “our motive and purpose at all times was in fact to see an ambitious improvement for people”.

    “When something like this hits, you have to change course completely,” he continues. “I did my duty as I saw as best I could.”

  • 19:27

    We're approaching ten hours of evidence from Cowen at this stage.

    If he didn’t get a good night’s sleep last night, he’ll be sure not to make the same mistake before he appears again next week.

  • 19:31

    John Paul Phelan has a couple of “clarification matters” he wants dealt with in relation to answers he got earlier.

    Christ.

  • 19:44

    He wants to know if he feels the Central Bank and the regulator let him down in terms of the advice they gave him when he was minister for finance.

    “I made it clear in my opening remarks in relation to that,” says Cowen.

    Yeah, ten hours ago John Paul. Get with the program.

    “I’m not here to pass judgment on anybody else,” says Cowen.

    He quotes the Nyberg report which says “people in a position to make decisions are and must be ultimately responsible for them regardless of what advice or suggestions they receive”.

    “So regardless, you can’t, as an exercise in accountability, pass on that responsibility to anyone else,” he says.

    “The higher and more influential their position, the greater their responsibility. I’m prepared to live by that principle on these issues.”

    With that, Cowen ends the day’s hearing largely as he began it. With strong words and an assertion that he will take his share of the responsibility for the crisis.

  • 19:45
    After a very interesting day at the banking inquiry, that’s all from me. Thanks for reading and see irishtimes.com for reports and analysis of today’s events.