Joe Higgins (Dublin West, Socialist Party) | Oireachtas source

In Professor Walsh's written submission to the committee he says, "Prior to the Irish banking crisis in 2008 it was widely believed that Irish banks were highly profitable and that they had sufficient cushions to withstand a variety of challenging scenarios." He says also, "The belief was based upon accounting reports, particularly income statements and balance sheets." Let us leave that quote hanging there for a moment. Just above that Professor Walsh quotes the United States Federal Deposit Insurance Corporation which documents the life cycle of a bank failure. It says:

In the first stage there is rapid loan growth, loan concentrations emerge and lending is aggressive, internal controls in the growth areas are weak and underwriting standards are lenient. Management usually points to the excellent earnings and contributions to capital that the growth has provided.

If the Federal Deposit Insurance Corporation in the United States in 1997 can outline the life cycle of a bank failure, if Professor Black and other witnesses come in here and rehearse more or less the same scenario, and if those features were manifestly present in Ireland prior to the crash, how can accounting reports in Ireland imply that there was no problem, as indicated by what Professor Walsh has said, that the belief was based upon accounting reports, particularly income statements and balance sheets?