Mr. David McWilliams:

Absolutely. After meeting Brian Lenihan on 4 October, I found myself back on the outside, where I had been since 2000. Contact became sporadic and then there was nothing at all. I thought this was simply the way he was moving away from my thinking.

My thinking was to be as flexible as possible and to try, as much as possible, to buy oneself time. His thinking, and the Department's thinking, became harder and harder and then the migration towards we are going to pay everything became almost obvious to those of us who were worried about it. I began to write constantly warning people that this was being used as a way for full payment, in the case of a bankruptcy, which was never the objective.

I argued that we should move to what is called the savings and loans model in the United States. That model came about as a result of a big collapse there in the 1980s and 1990s where eventually they realised the cost of bank bailouts was going to be too much. They decided that what they were going to do was force the bondholders - the debtholders - to take equity which made them shareholders in the banks which, in a way, allied the banks and shareholders in the same place. That was increasingly my thinking and then the following became so obvious to me after NAMA. What NAMA did with the guarantee was it ensured that this country would end up selling our assets at a discount and buying our liabilities at a premium. That is morally wrong but is also a financial disaster. At that point we had created the ELA or emergency liquidity assistance. That meant the banks' liquidity was solid so one could have rescinded the guarantee, kept NAMA in place and nothing would have happened because the ECB was back in there and the Central Bank was back in. That was the idea by-----