Dr. Donal Donovan:

If I may, using that framework, outline the scenarios. First, if they had known that Anglo Irish Bank was insolvent, then the question would have been what to do. I understand there is a view that it should have been liquidated overnight. That would have, however, led to the kinds of costs associated with the closure of Anglo Irish Bank that the Honohan report describes at some length. Whether those costs which he describes very vividly and to my knowledge he has not changed his view, would have been greater than the costs up to €64 billion or a figure ranging from €40 billion or some other number, who knows.

The second scenario is completely different and distinct and is the one that Anglo Irish Bank had, a liquidity problem. Should they have gone for emergency liquidity assistance, ELA, and hoped that something would work out at the end of the week? This is discussed quite a bit in our book. One never knows what would have happened. Would a solution have been found? In my view for what it is worth, I do not see a strong reason to believe that the European position on the Thursday before 29 September would have been radically different one week later. Others may disagree. What would have changed? We had no new information on the bank's situation. We were still thinking that it was illiquid but not insolvent. We never found that out until six months later. What would have happened in a week for the Europeans to say, "Okay, on second thoughts go ahead and liquidate Anglo Irish Bank and do something different". That is where I have a problem with the idea that waiting a week would have changed matters.