Dr. Donal Donovan:

It is a very fair question. People did not ask those questions. I can only say that in the case of the IMF, I have listed some of the explanations - I would not use the word "justifications" - at the end of page 5 of my presentation. The neglect of commercial property lending, for example, is a very important issue that has come out more clearly. Why did the IMF not look at the massive increase in developer lending? I have heard two reasons being mentioned. Of course there is no good explanation. First, many of these developers had properties in different parts of the world. They had different kinds of properties in different markets. I believe the view held by the regulators was that, while one part of this market might fail, or one type of product might fail, it would be unheard of for them all to go down together, since they were scattered in different places. It was argued that this had never happened before in a property market. I think that was an element. Second, nobody knew anything about the kinds of things that appeared in the section of the Honohan report dealing with what was really going on in commercial property lending. Given that nobody knew about the problems with bank guarantees and inadequate documentation, it would not have been reasonable for the IMF to have known about them. That was a big factor behind the property development collapse.