Mr. John Beggs:

Well, first of all, in relation to Sweden, clearly this was a relatively recent event that had occurred in Sweden. If I am not wrong, the factor that led to that bubble bursting was German unification and the impact of the currency markets and what that meant for Sweden's fixed exchange rate. There is always some factor that eventually leads to these. In the case of the Irish crisis, it was a global crisis. The European Commission produced some report in 2009 that said, and it actually referenced local shocks and problems, banking crises and mentioned Sweden, but it said this time it is different. This is a much more significant crisis. That only sort of explains why the Irish one is a much more significant crisis than maybe one that was managed in Sweden.

I reference in my written statement under the issue of the role of advisors in analysing the crisis and I said:

Against the backdrop of so much data and analysis, it would be difficult to argue that there was not a build up of interrelated risks and uncertainties in the Irish economy and banking system. After all, notwithstanding the belief in our economic fundamentals going back to the 1990s, the build up to the Irish banking crisis had previously occurred in varying degrees and circumstances in other advanced countries.

So I would say we had ample warning through the period. I referenced OECD reports, IMF reports, that the Irish property market was overvalued. Econometric studies that were saying we were 70% overvalued and then of course they were then pared back by other studies that said no we're not, which led Morgan Kelly to say "By the way, all those previous studies didn't take a long enough view of the timeframe for these analyses", and he came to the conclusion that we were 50%, 60% overvalued, and we would potentially have a fall of that magnitude.

So warning signs were there about what had happened in other countries. I would agree that in the period from probably 2004, I would say, or 2005 to 2007, lending policies ... lending was too rapid. It seems from what I have heard from other witnesses before this committee that maintaining market share, growing market share, seemed to be a more important driver of why credit was growing than there being, if you like, underlying sound reasons for the expansion. I agree with you that house prices were too high.

They were too high from a very, very early stage in this recovery, making it more difficult for people to buy houses. In our reports we have ... I referenced this ... showing the impact of rising house prices, rising interest rates on affordability. By 2006, affordability had deteriorated to its worst levels in ten years and that was only after financial institutions had provided 100% mortgages, 35 to 40-year loans, you know, trackers, whatever ... all the means they could to make it affordable for people to still buy houses. And at the same time they were providing finance for property developers where there was, obviously, rampant inflation going on, on that side. So, we were building up a problem, and the question is ... absenting the global economic crisis from mid-2008, how would we have managed that? That's the, if you like, the counterfactual that can't be ... well, we could think about it, but we haven't really figured out or thought about what might have happened to the Irish property market in the absence of that global shock. But it did happen and we are in this situation now. So, I think the warnings ... warnings are there, even in our own research, we had sufficient warnings, that people in, you know, risk management, credit management, should've been saying, "Yes, okay, I hear you still think there's going to be a soft landing, but, you know, I'm going to be more sceptical than that about it."