Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I welcome Governor Honohan back. When he appeared before the joint committee on 15 January, I asked him if Anglo Irish Bank should have been allowed to fail at the end of September 2008. I refer to page 113 of the transcript. This was in a hindsight scenario and the Governor replied, "Yes". I went on to ask, "Is the Governor saying that that decision should have been made even with the information available at that time or is he saying it with the information we now have about the insolvency?" He replied, "I think that decision should have been taken at that time", and then went on to explain what he meant by that. He referred to ELA and stated we should have said the following to the European authorities:

"We have this bank going down. We cannot afford to guarantee. The risks are too big. You have got to risk-share with us. If you want to wind this down orderly you’ve got to put European capital into this bank and then we will liquidate it down”.

A clear impression was given that the Governor's view was that even with the information available at the time, which did not point to any solvency problem, Anglo Irish Bank should have been allowed to fail, in the sense of ultimately being liquidated. Is that what the Governor meant to say?