Professor John FitzGerald:

We led a network of ten European research institutes, which did independent forecasts for the EU Commission and in January 2006 we had a preliminary meeting to draw up the forecast in Warsaw. I became aware, partly through the assistance of the Irish ambassador there that there were many Irish investors who wanted to invest a lot of money in property in Poland. My concern was that they would have leveraged, borrowed, large sums from Irish banks, gone to Poland, and, using that as equity, leveraged again. My concern in particular was that one Irish bank had a major bank in Poland and that Ireland could be exposed unduly through this form of investment so I wrote to the regulator about that.

My concern in March–April 2007 was that I had done work with banks providing them with macro-economic scenarios, stress scenarios, where things go really wrong - it is ironic that we did not heed our own advice on this – in the period 2005 to early 2007. We gave them macro-economic numbers. What they did with them after that was their own business. I was concerned that the stress tests undertaken by the Central Bank were not onerous enough. They examined a fall in house prices but did not take account of the fact that a lot of other things would happen at the same time. They were not using a model to do this. I contacted the Central Bank about my concerns in that regard in 2007.