Ciarán Lynch (Cork South Central, Labour) | Oireachtas source

Thank you very much, Deputy. Mr. Moran, if I can maybe just move on to kind of a similar theme with you? You seem to indicate in your statement that for the period of 2003 to 2008, the Department was reassured by the absence of any reference in the letters from the Central Bank Governor to a slowdown in housing, and by favourable assessments from an international body such as the IMF. However, Professor Honohan states that even before the failure of Lehman Brothers in September 2008, Irish residential property prices had been falling for more than 18 months and few observers expected the fall to end soon. We also know from hearing stuff we have had with regard to the financial stability reports, that certain people that were involved in them would say that they were maybe exercises and not frighten the horses and they were maybe not as accurate a reflection as we now know.

We know that Professor FitzGerald, in his engagement with the inquiry, was saying that the model that he was using for testing the economy was not measuring the level of bank exposure that was there and so forth. And then you say, on page 5 of your statement, that "In general terms the biggest deficiency of advice prior to the crisis was not linking macro-fiscal and financial stability risks ... [and] The Department shares in that deficiency." Could I maybe ask you to elaborate on that statement, referring, in particular, to the critical features of the deficiency you refer to and to the remedial steps, if any, taken since the crisis?