Brian Cowen still believes the blanket bank guarantee decision made on the night of September 29th 2008 was the best one that could have been taken given the information available to the Government
“I do believe based on the information we had available to us that night that we had to avoid a run on the banking system in Ireland. I believe that decision we made provided us with the prospect of achieving that. Now I can’t prove the counter factual to that.
“When we made that decision money stopped going out and not only did money stop going out, money came back in and it stabilised the situation and bought time for us to see how we could deal with a banking system that had probably got too big. It was made with the information that was available.”
Contrary to Kevin Cardiff’s earlier evidence, the former taoiseach had not made his mind up about a blanket bank guarantee in advance of the meeting in Government Buildings on September 29th 2008.
"No I hadn't my mind made up going into the meeting. We first of all got an appraisal from the Governor of the Central Bank and the financial regulator as to what was going on that day, and the level of outflows [of bank deposits] and all the rest of it. The governor of he Central Bank spoke in quite stark terms of where we were at and how serious the situation was.
“That made a deep impression on me…suddenly you realised that there were going to have to be some decisions made here pretty quickly, or urgently anyway.
“Obviously, in the midst of a crisis, you can’t ignore the governor of your Central Bank. He had been an advocate of a guarantee but he only came to that view as things developed. It wasn’t his view originally when he came back from being hospitalised in September.”
Brian Cowen consulted economist and then Central Bank board member Alan Gray for advice of the guarantee option on the night of September 29th 2008
“Alan Gray…was someone whose views I also respected. I phoned him and asked him what he thought of a guarantee option being used.
“Mr Gray emphasised 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.
“In that respect, it was important to be mindful how other lending institutions would regard it, and he stated that compliance with EU state aid rules would be an important factor to bear in mind.
“In dealing with that issue, it would also be important to be seen to charge a proper fee for the value of that guarantee to those institutions who got the benefit of it.
“Mr Gray also stated that if we were considering the introduction of a guarantee of any kind, that it should be strictly time-limited.
“This would assist in arguing that it was proportionate to meet the serious situation that was being dealt with. I thanked him for this advice.”
Brian Cowen believes EU institutions tried to bounce Ireland into a bailout programme in late 2010 with selective leaks to international media.
“It became very clear to me very quickly that people were trying to bounce us into a programme in principle.
“I have no doubt that there were elements within the EU institutions who were providing inspired leaks to the media with that agenda in mind.
“Subsequently, the rumour machine went into overdrive from what were termed generally as ‘eurozone sources’ that suggested we were applying for an EU-IMF [bailout] programme.
“The ECB were at all times pushing for this position of Ireland being in a programme without explicitly confirming that it would continue to support the Irish banking system.”
Brian Cowen is sorry that no proper record of the night of the guarantee decision was kept and that a cabinet meeting wasn’t called before markets opened the following morning to confirm the decision
“I was the chair of the meeting. I have to take responsibility for that [no proper note being kept] really at the end of the day, even though I didn’t set about for it to happen that way. I was the chairman. I personally would like there to be a record. It would be to the protection of all of us who were there.
“I take the point [about an earlier cabinet meeting] and it’s a matter of regret to me that it would have been better for me to call a cabinet meeting at 6am the next morning. But my judgment on the night was that this had to be out by 7am the next morning. It moved that quick that we had to make decisions on Monday night.”
