Professor Patrick Honohan:

This is a very important question. I would say there was. One of the influences here was the fact that in the legislation the Central Bank was there to promote the development of the financial services industry as well as everything else. If some junior staff member said that they did not think a bank should be allowed to do something, and they wrote a letter saying it should not be allowed to do it and signed it, so-and-so junior official, a telephone call would be received - evidence of this happening was provided - by a senior official saying the letter had been received. They would then say, "Well, this is a very important firm" or "We do not want to give the impression that we are over-regulating and I do not think there is a risk here." There was that type of environment. Of course, things like that will happen all the time; things will be escalated. However, what staff complained about was that it was done without the senior official saying, "Get the junior official to tell me about it. Let me understand what can we do and what we cannot do." It was more a decision taken at the top. That environment was created. The Deputy asked if there was political pressure. The Government wanted the development of the financial system and there is nothing wrong with its sound development, but it created that environment.

I put a footnote, No. 12, into the report. It refers a little to the surrounding atmosphere on the night and I talk about the idea that people were well liked in political circles. That was the closest I came to seeing something where one might have thought that perhaps they should not have been made that aware of how close they were, but that was on an emergency night.