THE DÁIL was not given full information on the banking crisis when the Government sought Opposition support for the banking guarantee, Fine Gael finance spokesman Michael Noonan has claimed.
Mr Noonan said he believed Minister for Finance Brian Lenihan was a “truthful person” who had not deliberately misled the House. “I was a backbencher that time and I asked Brian Lenihan, were you talking about liquidity or solvency? He said liquidity. I went on to argue there was a solvency issue. I’m not saying he misled us, I’m saying the House was provided with less than full information that night.”
He said documents relating to the crisis released last week showed that anyone who had listened to David Doyle, Secretary General at the Department of Finance, speaking at a meeting in September 2008, would have known there was a solvency problem.
Meanwhile, Mr Noonan told RTÉ radio yesterday the Department of Finance signalled a serious banking problem nine months before the guarantee and advised against a global guarantee a month later.
Brian Cowen was “asleep on the job” as minister for finance when the banking crisis loomed in early 2008, he said. Mr Noonan said Mr Cowen had failed to take “hard decisions” about the banks.
Mr Noonan referred to documents which he said showed the Department of Finance warned of a potential banking crisis in January 2008, nine months before the Government introduced the blanket guarantee. “They are signalling there that there could be a very serious problem,” he said.
“The alibi or excuse that this was bounced on the Government and they had to act within hours and they did their best with the information available – that’s not true. There are documents showing that this was signalled to the Taoiseach when he was minister for finance nine months before.”
Mr Noonan said the documents showed that the department had advocated legal mechanisms be put in place so that banks could be put into examinership. He added that a month later the department advised against a global guarantee. “Brian Cowen got advice that the issue of examinership in the portfolio of possibilities for the State should be put in place. It would have required legislation, changes in company law. Brian Cowen was asleep on the job at that particular point, he wasn’t making hard decisions.”
The Fine Gael finance spokesman said that Merrill Lynch advised against a blanket guarantee and recommended that Anglo Irish Bank be turned into a “bad bank” for impaired loans.
Mr Lenihan rejected Mr Noonan’s comments, saying the Government was responding to the situation. “Contrary to what Deputy Noonan claims, the documents released indicate that the Government was aware of the turbulence in the international financial markets,” Mr Lenihan said. “The documents show the Government and its officials were actively engaged in contingency planning . . . for the Irish financial system.”
Mr Lenihan said the reports on the banking crisis showed that from mid-September onwards the international financial crisis deteriorated rapidly with funding difficulties across the international and Irish financial systems. In response to this, the Government introduced the guarantee and this action was endorsed by Central Bank governor Patrick Honohan’s report, Mr Lenihan said.
Minister for Social Protection Éamon Ó Cuív also challenged Mr Noonan’s version of events, describing it as “factually incorrect”. Mr Ó Cuív said the crisis grew over time but came to a head in September. At that stage, he said, action had to be taken and a whole lot of options were given to the Government by Merrill Lynch.
Meanwhile, Mr Noonan described as “exaggerated” media reports of tension within the party following the failed heave against Enda Kenny. “I presume there are people who haven’t settled in yet, but the bulk of the party seem to be moving in the one direction and . . . we must get in behind it,” he added.