Mr. Eugene McCague:

The representatives of Bank of Ireland and AIB, sorry. Sequentially, they were the first people I heard expressing concerns. They were extremely concerned. They had ... I recall Mr. Gleeson of AIB making the point that if the share price in Anglo the following day when the markets opened fell anything like it had fallen that day, that there was a serious risk that people would take that as a proxy for deposits and that there would be people queuing outside the Irish banks so they had a very serious concern about that. They wanted the nationalisation of those two institutions. I think they used the phrase, "taken out", or some such phrase but it was clear that it was nationalisation they were talking about. I don't recall them actually using the words,"These institutions are insolvent", but my sense was that that was certainly the view that Mr. Gleeson was putting across in what he had to say and the liquidity issue was speaking for itself. And, indeed, they had their own concerns in relation to their own positions as a result.

When they left the room there was then a further discussion among the Government side, if you like, to call it that. What was evident to me was that I was coming at the end of a long meeting, near the end of a long meeting, rather than at the beginning of a meeting, because it was quite clear that the Government representatives had been thrashing this out for a number of hours. I mean, I was told the meeting had been going on for some hours beforehand and, therefore, this was ... the main focus was whether anything new had been learned from Bank of Ireland and AIB and I suppose what those banks had done was reaffirmed a position that was already known that it was a very serious crisis.

And I don't recall ... so the issue then really became do you nationalise Anglo and Irish Nationwide or don't you? By the time I was there, that had become the crux of the issue. I don't recall anyone arguing the case that they were insolvent on the night. I do recall Mr. Cardiff strongly argued the case for nationalisation. I've read his statement, which you kindly sent me, and I recall that. I don't know whether he based that on solvency but there was clearly concerns in relation to it. And I recall that the most significant event of that next session was that the Taoiseach pulled the discussion together and said that he felt a decision needed to be made and he turned to the Governor of the Central Bank, Mr. Hurley. In quite a formal fashion, he said, "Governor, as Taoiseach, I am entitled to rely on you for advice. Is Anglo Irish Bank [I think probably also Nationwide, I remember Anglo] is it a liquidity issue or a solvency issue?" and the Governor was quite unequivocal that it was a liquidity issue. And to some extent from that point on, the direction which the rest of the evening took, which I'm sure we will get to in due course, took its shape. So I don't remember anyone making an assertion that either of the banks were insolvent but, certainly, the nationalisation of the argument was implying that to me.