Joe Higgins (Dublin West, Socialist Party) | Oireachtas source

Second question, Mr. Noonan, is on 1 December 2010, in the Dáil speaking on the troika programme you said:

There is such a thing as moral hazard. It starts with the individual management and board of directors and then it goes to the institutions. It is a principle of moral hazard in the context of liberal capitalism that if one behaves recklessly, one gets punished. One gets punished because one deserves to get punished and it is an example to everyone else in the system that if people behave recklessly, they will be punished also. The principle of moral hazard applies not only to those who invested as shareholders and lost all their shares, as happened in Anglo Irish Bank.

It ... you go on to say it also applied to others and then you say: "The only part [right ... ] of moral hazard that seems not to be understood in this country is that those who lent recklessly can walk free and the taxpayers have their liabilities transferred to them." That's what you said.

This morning, Mr. Chopra, in his evidence - written evidence - was very strong on the question of those who lent recklessly and points to the IMF ex postevaluation of its financial support, dated January 2015, and he concludes that "the evidence is not clear on the risks of cross border spillovers from bailing in senior bank creditors in Ireland" and, essentially - I haven't time to quote it all but I hope you will look at it or get your officials to look at it - that, in fact, there isn't a big deal about burning bank holders, that it wouldn't cause the type of contagion that was being put up by the EU institutions, essentially to frighten people, and moreover, he ... I quote from the IMF:

Moreover, even if cross border contagion risks were considered important, steps could have been taken to ring fence these through appropriate policy responses in the affected markets. This could have included supporting steps by country authorities in cases where their banks' solvency would be threatened from writing down their direct exposures to Irish senior unsecured debt

And Chopra comments, finally:

Recent academic research confirms the view that spillover risks were exaggerated. An empirical analysis of funding cost spillovers in the euro zone [... show] that contagion between most euro zone banks is limited because they have fairly weak links.

Can I put it to you, in conclusion, Mr. Noonan, that ... does it look likely from this that there were bogus scares put out there by EU institutions to frighten this country into not burning bank holders and that the IMF now says that these were bogus and that, in fact, that should have been done and if it was done, wouldn't that have coincided with what you said about moral hazard five years ago?