Updated: 4pm
A FORMER TOP civil servant at the Department of Finance has said it is overly “simplistic” to blame the banking collapse on “bad guys”.
John Moran, who was Secretary General at the department from March 2012 to May 2014, told the banking inquiry:
“People like watching thriller TV programmes or movies, accustomed to plots with high suspense and good guys and bad guys.
“They have wanted the drama of Ireland’s economic collapse to be couched in terms of irresponsible overpaid bankers, reckless developers, the night of the bank guarantee and the burning of these faceless bondholders. It makes good TV as they say, but the reality is more mundane.
“A simplistic rhetoric has been entertained that if we had not had a collapse of Lehman Brothers and the Irish banks and had burned the “vulture funds”, we would have had no issues.
“One thing is for certain: our property price collapse led to awful, widespread destruction of personal wealth and to a growth in unemployment, poverty and emigration. But the sad reality is that it was the acute lack of fiscal capacity at governmental level that restricted flexibility in how we might minimise the impact of those problems.”
Moran said people “like repeating that we have put €64 billion into the banks”, adding: “This is true and it is a horrendous burden to shoulder, but it was a once-off expenditure and we should hope to recover perhaps half of that.”
People talk a lot less about the fact that each year we have also loaded debt onto the country to pay for ongoing annual deficits, none of which we’ll get back. This debt may end up being be more than three times the net cost of the bailout of the banks.
“According to one observer, the factual position is that, of the €7.5 billion in interest payment faced by the State in 2015, only around €800 million is bank-related.”
Today, we are giving ourselves public services, wages and payments – for which we ourselves are not paying and leaving the bill to our children and their children. This all should not be forgotten.
Bank guarantee
Earlier today, another former Secretary General at the department Kevin Cardiff said he doesn’t recall then Taoiseach Brian Cowen using the phrase “We are not f***ing nationalising Anglo” at the bank guarantee meeting on 29 September 2008.
“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,” Cardiff said.
He was responding to a question put to him by Senator Susan O’Keeffe at a banking inquiry meeting.
Cardiff said he believed Cowen was “trying to do his best for his country”.
He noted that a “secret” unit in the department began working on a potential banking rescue under Cowen’s tenure as finance minister.
Cardiff’s statement was leaked to the media before his appearance, an issue that has been referred to gardaí.
In it, he is critical of evidence given to the committee by former European Central Bank (ECB) chief Jean-Claude Trichet:
We didn’t jump, we were pushed
Earlier in the meeting, Cardiff said the government was essentially forced into entering the bailout.
Were we pushed? At the moment we entered it, we were pushed – quite hard.
He said that at the end of November 2010 the Irish government wanted senior Anglo bondholders to share the debt burden.
Cardiff said he was told by a reliable source that then International Monetary Fund chief Dominique Strauss-Kahn was “in favour of imposing the burden on senior bondholders” and thought he could get the ECB to agree. He was wrong and received “a strong negative reaction”.
Cardiff said that as a result of this Ireland was told the bailout deal would not go ahead if burning senior bondholders was pursued.
“Formally it was Ireland’s decision to not burn any bondholders, but it was one of those decisions without much option.”
Echoing comments made by another former Secretary General at the Department of Finance David Doyle yesterday, Cardiff said legislation to nationalise Anglo Irish Bank was ready to go on the night of the bank guarantee.
“It would not have been pretty but it could have been done within four days,” he told the committee.
Cardiff said officials in his department were not “inept” and sought to “preserve Ireland’s best interests”.
He said he wasn’t sure if then Finance Minister Brian Lenihan was passing on crucial banking system information to Cabinet, for fear of it being leaked.
Cardiff added that the banks were not insolvent on the night of the guarantee, as far as he knew.
When O’Keeffe questioned Cardiff about his document-keeping, he said there wasn’t much time to write minutes of meetings of meetings as people at the department were “dead on our feet” from working 24-hour days.
Cardiff said that many people had called for a bank guarantee in the months proceeding September 2008, including from former Anglo chief Seán FitzPatrick, Davys stockbrokers and Cowen’s predecessor tat the Department of Finance, Charlie McCreevy.
He said it did not fall under the department’s remit to supervise banks, saying this was a job for the Financial Regulator.
Cardiff said he has always tried to create jobs when he can, noting:
Maybe by the skin of my teeth I haven’t lost my job in this recession, but I was out of work for a year in the last one and it’s an awful thing.
Cardiff was Secretary General at the Department of Finance from 2010 to 2012. He joined the Department in 1984 and had a number of roles there, including responsibility for the Taxation and Financial Services Division and Tax Policy.
In March 2012, he was nominated as Ireland’s representative at the European Court of Auditors in Luxembourg for a six-year period.
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