Professor Patrick Honohan:

It was a solvency issue, but the bank was not insolvent. I do not want to defend the bank, given that the accounting was not particularly impressive. Merrill Lynch referred to an extreme stress case analysis. Sometimes, specialists do a reverse stress test to determine what size of a stress the bank could survive. It is possible to design the stress test to be so big that the bank will fail. It is one way of doing it. I do not know, and I have no evidence, what the extreme stress case was. It might have been very extreme or it might have been implausible. We know it was not implausible, given that the bank did lose the money. We are not in a state where they should have said it was awful and they were going to lose tens of billions of euro. However, they were given enough information to know they should not have left the bank in private hands.