Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I have been a Minister under ... in three Administrations under different taoisigh and I have a practice never to go back into the affairs of my predecessors. I don't believe in that, but if my officials decided that I needed to know, they would tell me, and I saw one letter from Mr. Trichet to Brian Lenihan and it was around the possibility that ELA would be discontinued if Ireland didn't go into a programme, but I think you have access to that material already. But I haven't seen anything around the guarantee and I don't know of any correspondence that was around the guarantee. I wasn't Fine Gael spokesman the time of the guarantee - I was a backbencher - but I did take part in the debate in the Dáil and I inquired to know whether it was a liquidity crisis or a solvency crisis. Apart from the Act having sections in it .... it looked to me sections drafted to remediate solvency rather than liquidity, I also felt that - and I subsequently confirmed in my reading - that if you have a liquidity problem in a bank where money is moving out, a guarantee can solve that, but if you have a solvency problem you have to recapitalise. So I voted for the guarantee on the night. I thought it was too wide, and I said in our own party that the scope of it was too wide and it was exposing us too widely. But I think that ... I regret that I didn't follow up on my question. I was assured it was only a liquidity crisis on the night by the Minister, but solvency would have required an injection of capital. And it might have been possible to stay out of the bailout if the guarantee was accompanied by a restructuring and a recapitalisation of the banks, but then it might have been a dearer bailout because money on the markets might have been more expensive if we had stayed in the markets than money that we accessed subsequently from the European funds and the IMF, particularly when the reductions in interest rates took out the bit they had put in for reasons of moral hazard. And they were giving us money more or less ... slight margin above the cost of money. So that's my take on the guarantee, but I don't know of any correspondence or anything that went on between the authorities at that stage, and I didn't seek to know of it. You know, Kevin Cardiff gave you very strong evidence and he was there at the time, so-----