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DAVID DOYLE HAS been asked whether or not the Department of Finance was prepared for the banking collapse.
Fianna Fáil TD Michael McGrath asked the former secretary general at the department why there was no plan in place in 2008 to put banks into examinership if necessary.
“At the end of September 2008, when the proverbial hit the fan, the department did not have resolution legislation in place to deal with the situation where a bank was insolvent or where the department felt that the bank should be put into some sort of examinership,” McGrath stated.
In response, Doyle said: “A lot changed between January and September 2008. The financial markets continued to melt down and then reached a crisis point”.
He added that putting a bank into examinership gives rise to a number of issues that would not occur when placing a company into examinership.
“If you appoint an examiner to a bank, the first thing that happens is that a red card goes up on every money desk in Europe and the world and funds are recalled and there’s no fresh funds made available so you initially trigger a financial crisis for that institution.”
Earlier in the session, Doyle recalled the fateful night of the bank guarantee, 29 September 2008.
He said that at the start of the meeting the then Finance Minister Brian Lenihan was strongly of the opinion that Anglo should have been nationalised, but changed his mind as the debate went on.
Doyle noted that at one point the Taoiseach, Brian Cowen, “nodded to the minister and said ‘Come on let’s go out and have a chat’ and so they went out a had a chat”.
“I don’t know how long that lasted, I can’t recall. It certainly wasn’t five minutes or ten minutes, it could have been longer.”
He said he “couldn’t swear” on the time this discussion took place but noted it was “very late”.
Eventually the Taoiseach came back in and said they had decided to reccommend to the cabinet a guarantee and that Anglo was not being nationalised. I’m pretty certain he said ‘for the moment’.
Doyle said Lenihan did not indicate any disagreement with this stance.
Central Bank criticism
Doyle said the Central Bank “placed undue reliance” on the financial regulator’s assessments of Irish banks, who in turn did not properly scrutinise the institution’s financial records.
In addition, he said his own department was wrong to “take at face value the assessment of both the Central Bank and the regulator”, stating: “I regret this.”
He said the guarantee was necessary, as was the nationalisation of Anglo Irish Bank to stop its collapse – something he said could have triggered a “wider banking collapse”.
“On 29 September it emerged that Anglo had exhausted all avenues in terms of raising funds and was heading for the red with the Central Bank. This was a key trigger for intervention. The other banks had experienced severe liquidity issues also.
A failure to address the liquidity issues would have been catastrophic. The option of doing nothing was simply not a runner.
Looking back, the government were in an impossible position. They were on the horns of a dilemma. Action had to be taken.
Doyle said the Central Bank governor informed those present at the meeting that then European Central Bank president Jean-Claude Trichet had made it know “that no bank failure could be allowed, or words to that effect”.
Doyle noted that draft legislation to nationalise a bank was ready at this time.
He said that a huge increase in lending, combined with an “over-reliance” on the property market and “loose and uncoordinated planning controls” heightened the collapse.
“It is fair to say that in the decade up to 2008, the demands from all sides were for more public services and less taxation. The typical response to increased level of spending in many quarters was that it wasn’t big enough. The outcome was that from 1998 to 2008 inclusive, total government current and capital spending trebled.
Doyle was appointed secretary general at the department in July 2006 and retired in January 2010. Prior to this, he was the second secretary general in the Sectoral Policy Division (Public Expenditure Division) of the department from 2001 to 2006.
Originally published: 16.47
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Cowen over rules Lenihan , leaves the country on the floor , sets up Nama to ensure the favoured developers don’t become unemployed and now works for Dinny who is benefiting handsomely from the Anglo farce, the golden circle is a wondrous place to be in .
Lenihan did most of Nama on his own and kept the cabinet out of the loop.
The EU kept a close eye on it and even stopped him from giving too much money to the failed developers.
See no monkey , hear no monkey , speak no monkey … Be a monkey ..
This is dragging on and on. Just bring Cowen in and beat it out of him. Who is he protecting and why he made the decisions he did. Tar and Feather afterwards.
Tarring and feathering is way too lenient for Cowen
I’m being taken for a monkey
Pass the parcel………a game for all grades.
Also interesting that the years mentioned coincided with those when Fianna Fail were arse-deep in the trough.
Reading between the lines of Mr. Doyle’s contribution to the Banking Inquiry, it would appear that full gamut of defences for the proper management and control of our nation’s finances were nobbled by our political masters of all hues, during the period 1998 and 2005 – i.e bullied into submission to the will of the spend, spend, spend brigade.
Central Bank seemingly was told to back off, as was Banking Regulator, and Department of Finance i.e. from doing their jobs properly on behalf of Ireland’s citizens
And who now is asking the hard questions of the nobbled parties? More nobblers of course! Younger and more ambitious ones!
Maybe it’s time to start feeling some sympathy for our senior civil servants, given the type of shyte they must endure from their Political overlords.
The Banking Inquiry is a load of old cobblers, unless it can lead to fundamental change in the way politicians and key Departments within the Civil Service interact, plan and spend the nations finances.
The Civil Service must be given the power to cry halt to any bullyboy tactics adopted by politicians during any future economic booms.
What ,exactly , does all this sh#t mean?
Farcical.
Doyle said “I regret this.” as he trots off with his big pension. Go$shite has a pension while there are people who have self harmed but he’s in he golden circle….
What a load of tripe no one will be blamed for this fiasco we will all be paying this off for the rest of our lives clowns running the country
Remember all this when you go to vote in the next election they work for there parties not for the people or the country a whole bunch of piss artists could not organise a piss up in a brewery. It’s the tax payer that’s caught up in this whole mess. Frustrated voter
You know, I used to see those terrible news stories of ‘wacko’s’ going postal and popping down to their local bank/civic office etc with some weapons and opening fire. ‘What a loon’ I used to think, now~a~days I’m not so sure. Let’s just line the fcukers up against the wall and ease the burden a bit. What’s Cowen on? €150K of taxpayers money a year? I’m sure a box of shells and skip hire would be pretty cheap in comparison. Every little helps!
I’d settle for them having a pay related performance pension…….in which case Cowen would owe us……..a lot.
Not just Cowen a big bunch of spongers who “retired” on big healthy pensions also owe us the tax payer.
Check out the Greek Parliament’s Debt Truth Committee Preliminary Findings on zero hedge great read for anyone interested no news on the journal about greece for some reason then again it is a piece of shite of a news source
It’s all about the golden circles, the handshakes, the pats on he back, the brown envelopes, the cushy jobs, oh wait it’s all irish politics all over
Rob from the poor and give to the rich
Average joe hasn’t a chance in this country it just isn’t fair
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