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

All right. I just want to go to one other thing. There's a document I referred to earlier before we went to the break, with regard to this Financial Stability Issues - Scoping Paper, and we established your relationship with that. I just want to go through just a few bits of that with you very briefly, okay? If I can move on to page 10 of it, and it's "3. Scenario 1 - An institution that is illiquid but solvent."

Okay. And then, so ... if I can move on to page 11 to 3.2, okay? It then goes on to the "Department/Minister's role in this situation" and it says: "Traditionally, it would be considered that the Minister for Finance does not have a specific role when an institution is illiquid but solvent and there is no legal role for the Minister in such an event". If I can then move on to page 13 and it talks about Scenario 2 and Scenario 2 is "An institution that is insolvent (or approaching insolvency)." And I move on to page 15, which is on item 4.3 and it says the:

Role/Legal powers of the Minister in this situation [if, as] outlined above, if an insolvent bank sought ELA, the CBFSAI would be legally prohibited from extending it. However, if the bank was systemically important and the Government agreed to extend a guarantee to it[s] liabilities, then [this would in turn, from an insolvency, sorry] ... this would turn it from an insolvent bank into an illiquid but solvent one.

So if I can then move down to the bottom of the page, which is the very, very last sentence there:

The main principle contained in these instructions is that a letter [would] expressly, or by implication, give a guarantee or an undertaking not already authorised by legislation, should not, in any circumstances, be issued. The CBFSAI's view is that [the] letter of comfort from the Minister to cover the CBFSAI's risks would not be sufficient for CBFSAI to lend to an insolvent institution - a comprehensive guarantee would be necessary.

You told us earlier in the meeting, Mr. Beausang, of a draft letter of comfort on the night of the guarantee. Why would this be necessary if ... if scenario 1 or scenario 2 were the accepted position or the dilemma that you found yourself in that night?