Mr. Kevin Cardiff:

Okay. The push we got, as I said, in some ways was direct. We knew who was doing it; we knew what they were saying. In other cases though, the pressure came indirectly via some misinformation, via anonymous media briefings reportedly coming from official sources, which acted to accelerate market pressures and create enormous pressure on Ireland to enter an EU-IMF programme quickly. The ECB advice in regard to entry to the EU-IMF programme was specific, it was directly tied to conditions they had outlined in correspondence, and there were consequences for non-compliance. The ECB had its reasons and I don't say that they were wrong from their perspective, certainly, but their view was clearly an important pressure point. But it was the combination of negative circumstances and market developments that were the real push factor, quite apart from the timing issue. Barring some radical change of sentiment in the market and in the light of a very difficult domestic situation, and increasing scepticism prompted by the so-called Deauville agreement and public comments by the ECB about reducing atypical support for banking systems, increasing the risk of our stance on sovereign bond investors and so forth, it was unlikely ... quite unlikely that Ireland could finance itself in 2011. We were unlikely to be able to borrow or might only be able to do so at such high interest rates as to make our debt become unsustainable. We needed an alternative set of lenders, and I, for one, was grateful that there were institutions available to do that. I also appreciated that the negotiating and technical teams with which we dealt with were generally knowledgeable, they were professional and committed. They came here committed to Ireland and to its economic rescue within the bounds of their professional role. There were natural professional tensions, which I've outlined in detail in my report but we aimed to make these negotiators ... we aimed to make these negotiators ambassadors for Ireland back in their head offices and I believe they did act in that role. It was, though, clearly inappropriate that at the outset, at the point when we were trying to make decisions, that back door briefings of the media should be used to undermine our position in the markets so as to add to our pressures. Democratic systems should not rely on undermining reputations and distributing misinformation via anonymous briefings.

What about burning bondholders? Well, there is a number of misapprehensions which ought to be addressed. There is a view that Ireland was always in favour of burning bondholders; the Irish Government and everybody else was always against, just to simplify. Actually, the Irish Government did not always favour imposing burden-sharing on senior bondholders. Advice was at various times that it might be legally impossible or very unwise from a market point of view. However, by the end of November 2010, the Irish Government, represented by Brian Lenihan, did want to insist that senior bank bondholders would share the burden of bank failure. At the time, my information is second-hand but it is quite strong I think, we understood that Dominique Strauss-Kahn, head of the IMF, was not only in favour of imposing burden-sharing on the senior bank bondholders, but also that he believed he could persuade other major players, including the major European governments, the Americans and the ECB to go along. Strauss-Kahn was to, and I understand did, convene in a conference call to make this arrangement. We heard back however via the IMF team in Dublin that instead of a positive response, there had been a strong negative reaction from the ECB, from Geithner and others and that, moreover, the EU-IMF programme would not go ahead in senior bondholder burden-sharing was contemplated. This was confirmed by European Commission and ECB negotiators in Dublin and the IMF negotiators reluctantly confirmed that this was now also the official position of the IMF. So, of course, it was formally Ireland's decision not to burn bondholders, but it was one of those decisions without much option.

But, just to provide some balance, and in the theme of things not being simple, one should remember that, from a European point of view, the burden sharing was seen as a real and very serious risk; a new Lehmans type event, perhaps. Even one of the IMF negotiators at the time said it might be havoc and Europe was teetering on the edge of a much more serious sovereign borrowing crisis than was already evident. Europe could be helpful if Ireland, or Portugal, or Greece - smaller countries - found themselves in trouble, but what if the bond-buying strike, the absolute pulling back from the markets by bond investors, extended to larger countries? Who could rescue them? So, you see why some partners might not have favoured too much experimentation in Ireland.

On other areas of the negotiation with the external partners, we strove hard to get the best deal possible for Ireland and, indeed, we achieved some considerable wins. First, no threat to our corporation tax system, on which many jobs depended and depend; no collateral requirement for the loans; adoption, wholesale, of the Irish four-year plan - national recovery plan; agreement to Irish figures for fiscal adjustment, so no addition front-loading of the fiscal adjustment beyond the numbers that had already been announced by the Irish Government. At some point, we got an extra year to make the overall fiscal adjustments required. We got a tacit - unfortunately not explicit, but a tacit - ECB commitment to continued banking system support and we got a "no fire sales" approach to bank deleveraging, which probably saved us some billions later. And there were other gains in negotiations later on. All of these were positive aspects of the deal, worked out by a relatively small group of people in Dublin, Brussels and elsewhere but, of course, the most positive of all was getting commitment to loans totalling nearly €70 billion from a range of partner countries, many of whom contributed to our rescue through three separate mechanisms. So, if you take, for example, Germany, they would have contributed about a quarter of the money for the EFSF, they would have contributed about 20% of the money indirectly for the EFSM and probably about 6% of the money from the IMF was theirs. So, some people were giving money to us on the triple.

Later on, at the end of March 2011, with the new Government in power and itself intending to engage in some senior bond burden sharing in relation to Anglo bonds specifically, there had seemed to be some shift of opinion within the ECB. The question of these Anglo bondholders was to be considered by the ECB governing council but in the end we received their decision - in terms very close to being an instruction - that bondholders were not to share the burden even on a purely voluntary basis. So important was continuing ECB support and opinion that the Government decided not to take the risk of alienating them. I've no doubt that Mr. Trichet and his governing council were sincere in their concerns and their actions. It would certainly be wrong to judge the balance of the ECB's very active support and engagement with Ireland on the basis of this event alone but, that day, the ECB did a good deal more than would be implied by the phrase "simply gave advice" and we shouldn't hide from that.

To go back for a moment, State support for the banking system was not just addressing the immediate liquidity hole: it was protecting the integrity of the Irish payment system; it was protecting the willingness of trading companies to deal with Irish companies; it was protecting the willingness of payment card companies to allow international transactions to the customers of Irish banks; the willingness of credit rating companies to leave the banks with any sort of credit rating; the willingness of auditors to sign off on their accounts; and the readiness of clearing houses to clear payments for Irish banks. Our banks were not just under attack from a single source - it wasn't just a problem of losing deposits - they were under siege from every quarter that they dealt with and their very existence was under persistent threat for much of the crisis period. Every official intervention brought with it a new workload and none of the interventions in the banking system was in the least straightforward. We had to manage within EU state aid rules and every minor aspect of our banking interventions had to be cleared and negotiated with the European Commission. We had to overcome major statistical and accounting hurdles, usually in the direction of being less transparent, incidentally. We had to negotiate through difficult moments with other member states and EU institutions while also negotiating with - or sometimes doing battle with - potential investors, hedge and private equity funds, vultures and angels, honest dealers and gougers.

From 2008 to 2012, there was not so much a crisis as, it seemed, a crisis per week. There was, quite honestly, never a moment in that period when there was not some great peril to our banking system and our economy.

We are all well aware of the danger of judging events in the benefit of hindsight. Being aware of it doesn't mean we shouldn't do it. Those dangers are magnified where the events sought to be retrospectively judged were as complex and exceptional as those since September 2008. It is, of course, understandable that people will want to know, not just how things happened the way they did but will also understandably want to know who was involved, who was there - and I was one of the people who was there. Some other people will say "I wasn't there" or "I was away and I left me phone at home" or those things, but I was there for the whole time. I believe it's important against this background to reflect on the fairness or validity of the now standard narrative that hopelessly inept civil servants, poorly led, were incapable of dealing with our nation's problem and that was the source of the difficulty. Those involved in dealing with the crisis on the public service side, myself included, I think, worked diligently over huge hours, to the point of real exhaustion, in the face of pressures which most people in the public or private sector, thankfully, won't have to face in a full career. The Department of Finance team, I believe, formed ... performed with competence and integrity in the face of those pressures, helping to hold all the public institutions together to work in the same direction, while seeking to protect Ireland's best interest when working with outside institutions.

I have, of course, already talked in previous committee hearings about failings and about issues that need to be addressed in this ... in the Department and in the Civil Service, so this is not to suggest that we should get a clean bill of health or anything like it. But many of the Civil Service managers moved mountains over those four years. They did things in a month which, in normal times, might be the biggest effort of a year. A huge legislative programme, budgets and emergency budgets, negotiations on many different fronts at the same time, hundreds of EU-IMF programme targets, all of them met on time, except where a ministerial decision said "We delay."

This couldn't have been the case if we were all inept. We were not. And yet we had an enormous crisis. To consider why, not long after I became Secretary General of the Department of Finance, I arranged for what became known as the Wright report. I wanted a reasoned report on the past and a blueprint for a new Department of Finance. Many of the recommendations from Wright I expected but otherwise were a significant challenge to my previous thinking and, of course, implementation was compliment ... complicated by the ongoing crisis, the change of Government, the split of the Department of Finance. I was able to get some work under way in that time and, in particular, by bringing into ... in a variety of new and highly-skilled individuals, through a range non-traditional mechanics - secondments, open recruitments, special public interest appointments. I feel I probably stretched the limits of Civil Service law in that period, in recruitment processes.