Brian Cowen (Laois-Offaly, Fianna Fail)

As a result, when the international credit market unexpectedly froze, the banks were vulnerable and in need of Government guarantees. Inadequate financial regulatory controls were implemented in Ireland and other international economies based on a mistaken view of governance within banks. There were property tax incentives in place over the period from the mid-1990s which, with the benefit of hindsight, should have been abolished many years prior to my decision in December 2005 to abolish them. Individuals were left in dominant positions within individual financial institutions for too long a period. There were stunning failures of corporate governance and not enough turnaround in management personnel in the institutions in question.

There was a failure to impose international stability risk assessments and protection systems which took account of the interaction of global financial systems. This was not a peculiarly Irish problem, as recent events in Europe have demonstrated. There was also a failure to implement more intensive compliance regulation of those financial institutions which were too big to fail. Auditors, regulators and governments all share part of this responsibility. The higher capital requirements on speculative property loans in Irish banks which were introduced at the start of 2007 should have been imposed many years earlier before the rapid escalation in property lending took place.

The lessons which have been highlighted in the independent reports have now been fully taken on board and policies implemented to ensure that a banking crisis can never happen again in Ireland. While the Government shares and accepts its responsibility for its role in these mistakes, it is noteworthy that many of its strongest critics were proposing measures, such as higher spending and the radical reduction or abolition of stamp duty, which would have made the position much worse.

In considering these two reports, I am fully aware that the Government's response to the banking crisis, while necessary, has not of itself been popular. There has been justifiable anger about the conduct of the banks and it is anger I share. I am, however, confident that the right calls have been made to deal with this distressing situation and I have noted that the Central Bank Governor, in his report, broadly confirms that.

The Government response to the banking crisis has involved taking ten actions - the guarantee of Irish banking liabilities; the establishment of NAMA; the appointment of a new Governor of the Central Bank and a new Financial Regulator; the integration of the new Central Banking Commission and Financial Regulator structure; the setting of higher capital requirements for Irish banks by the regulator; the requirement of banks to increase lending to the enterprise sector; the restriction on bankers' pay-----

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