BRIAN COWEN MADE his second appearance before the banking inquiry today.
This time the line of questioning focussed on his tenure as Taoiseach from 2008-2011, the bank guarantee and Ireland entering the Troika bailout programme.
Cowen was in less bullish mood than last week, but he still staunchly defended the actions of his government.
Here’s what we learned from today’s meeting:
1. Ireland was “bounced” into the bailout
Cowen told the committee Ireland was essentially “bounced” into a bailout programme with the International Monetary Fund (IMF), European Central Bank (ECB) and European Commission.
He said negotiations on a bailout had only begun when Troika officials began to brief the media.
Cowen went on to say he “underestimated the impact of the IMF coming to town element which immediately sent a message [in November 2010] that this was now a done deal rather than a genuine continuation of existing discussions up to then”.
He said this perception was further reinforced when the Central Bank Governor Patrick Honohan gave his now infamous Morning Ireland interview and revealed Ireland was in bailout negotiations.
This development showed the government in a bad light because of the interpretation given to events that we were keeping what was going on away from people. In fact we were trying to put ourselves in the best position we could, before formally requesting assistance.
“We wanted to know exactly what we were getting into before we agreed to formally apply for any programme,” Cowen said.
He later said that Honohan’s intervention was not damaging to the bailout negotiations, but was “damaging politically”.
2. He played golf with Seán Fitzpatrick, but Anglo didn’t come up
Sinn Féin’s Pearse Doherty asked Cowen about a golf trip he went on with former Anglo director Fintan Drury and former Anglo chairman Seán FitzPatrick at Druids Glen in Co Wicklow in July 2008.
Cowen said he contacted Drury about setting up a meeting to discuss the economy before he went on holidays during the Dáil recess, recalling telling him: “I haven’t had a break in a long time.”
Cowen said when Drury set up an “informal get-together” with FitzPatrick and others at Druids Glen and he had “no problem” with this, adding: “Fair enough, I hadn’t played golf in a long time.”
He noted that some people have drawn “conspiracy theories” from the meeting, but insisted they didn’t discuss Anglo.
As God as my witness … I wasn’t discussing banking, I was discussing the economy.
“I want to assure the Irish people I didn’t do anything untoward.”
Cowen took exception to being repeatedly asked the question, saying it was fair to ask but he had clarified it several times over the course of the meeting.
Really it’s a question of my integrity … it’s not the way I operate.
3. The bank guarantee was the ‘least worst’ option
Cowen said the bank guarantee was ultimately the “least worst” option available to the government at the time and had to be viewed in context.
He compared the economic situation to the great Wall Street crash of 1929, describing it as a “once in a century” dilemma.
Cowen noted that John Hurley, then Central Bank governor, told those present at the late-night meeting on 29 September 2008, Anglo Irish Bank lost €2 billion in deposits that day.
“The issue was going to have to be addressed immediately,” he said.
Eventually I put it to the table that it seemed to me that a full guarantee option provided the best prospects of addressing the urgent liquidity problem and of sending a clear message that Ireland was standing behind the financial system which would be understood by the markets.
4. He sought outside advice
Cowen went into detail about his consultations with economist and then Central Bank board governor Alan Gray on the night of 29 September 2008 saying he was someone whose views he 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.
He said that Gray’s advice was that any guarantee should be time-limited. This would help make the case publicly that the guarantee was the best option. Asked by Socialist TD Joe Higgins if he was aware that Gray was a member of the board at Quinn Insurance, Cowen said he was not.
Fine Gael TD John Paul Phelan also probed the Gray issue, asking was he “on the payroll”. Cowen said Gray was giving his views and that he regarded that as the behaviour of “a conscientious member of the board”.
5. But didn’t know who was outside the room
Late on in today’s hearing, under questioning from committee chair Ciarán Lynch, Cowen admitted he was not aware that officials from the NTMA were outside the room on the night the guarantee was being discussed.
He said he did not know who was outside the door until they came in. Lynch pointed out that the agency was “pro-nationalisation” rather than the guarantee, but Cowen insisted that the position of the NTMA was being relayed in the meeting by Kevin Cardiff.
“It wasn’t a question of them being out of the loop, they were in the loop,” he insisted.
6. He doesn’t recall *that* statement about nationalisation
Cowen is famously quoted by journalist Pat Leahy as saying ”We are not f***ing nationalising Anglo” at the bank guarantee meeting. When Labour Senator Susan O’Keeffe questioned if this was true, he said he didn’t recall making the comment.
After some back and forth, committee chair Ciarán Lynch told the pair to “move away from the colour”.
When discussing the same topic at the inquiry last month, former Secretary General at the Department of Finance Kevin Cardiff said: “It’d be a lie to say I never heard the Taoiseach use the F word, but I didn’t hear him use that specific phrase.”
On more than one occasion, Lynch criticised O’Keeffe for asking Cowen questions about documents she didn’t provide him with beforehand.
7. He didn’t overrule Brian Lenihan
Cowen denied overruling the late finance minister at the meeting where the bank guarantee was decided on 29 September 2008. Lenihan had wanted to nationalise Anglo and extend a bank guarantee to the other banks, but he later changed his mind.
Cowen noted that nationalisation “doesn’t solve all the problems” as it would have meant the State permanently taking on Anglo’s liabilities. He said the conversation between the two men wasn’t in any way “adversarial or confrontational”.
He also noted that Lenihan wasn’t present when the decision was made to not burn bondholders as Lenihan “had a very busy schedule to fulfil from early the next morning”.
O’Keeffe asked Cowen why there isn’t a “proper full note” of what happened on the night of the guarantee. The former Fianna Fáil leader said he was sorry this is the case and, as chair of the meeting, he takes responsibility for the lack of a full record.
8. He’s still sorry
Cowen’s widely-reported apology last week was repeated again today. He reiterated that he was sorry for his role in the crash and at one stage said that that he privately asks himself everyday if he could have done something different.
Later, in an exchange with Sinn Féin’s Pearse Doherty, Cowen said:
People will apportion blame and responsibility wherever they will. I am just simply saying that as Taoiseach I take my share of the responsibility in respect of what happened and I do so because I am duty bound to do that. Now, for party political reasons people will apportion a greater amount of blame than maybe is my due. But that’s politics but I have at all times sought to do what was right for the country, to do what was right in a very difficult situation.
9. The big mistake
Fine Gael senator Michael D’Arcy asked him to outline the “single biggest mistake” made between 2000 and 2008.
“A lot of mistakes, I suppose, were made,” Cowen said before going on to outline the difficulties that arose out of entry to the euro and Ireland relinquishing control of interest rates.
When you’re in a new currency and you no longer have control over your interest rates, you’ve got to find other parts of the tool kit to make sure you don’t end up where we ended up.
10. Everyone was happy about getting a toilet break
At one stage shortly before 2pm, Cowen asked how many more questioners would speak before lunch. It was just one, but the former Taoiseach was caught a bit short and Lynch agreed to suspend the meeting for a three-minute toilet break.
Others seemed to be happy Cowen spoke up as several bodies ran for the exit.
11. But did we really learn anything new?
Cowen’s performance today was far more sedate than his bombastic opening salvos last Thursday. That didn’t make for many, if any, particularly interesting exchanges.
But we’ve also been left asking whether anything huge has been uncovered by Cowen’s two days before the inquiry. There’s been lots of interesting detail. But while this phase of the inquiry was billed as its pièce de résistance, many appearances have seen witnesses discuss events and facts that are already common knowledge.
Fellow former taoiseach Bertie Ahern is set to appear next week. One wonders if he will have anything new to say.
- with reporting from Hugh O’Connell
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