Professor Philip Lane:

Yes, although there is a difference between consultation and signing off on them. The responsibility for the answer lay with the then Minister. I should be clear that, in general terms, if there were no downsides, asking permission is a positive feature. Asking permission has its own merit. Given the nature of the modern financial system, loan transferability has become a big part of the funding of banks, especially under crisis conditions. Even within the code there was an exception clause dealing with financial distress. The main difference between us is that my view of that is forward-looking and anticipatory; it is not the case that the Irish banking system is in a position where that should be restricted to failing or likely to fail institutions.

We can come back to what I have said here today and before. Loan sales are important from a macro and national perspective. Leaving all the risk of these loans in the Irish banking system would be like what we had before. This is an excessive level of risk and it is important to reduce the risk in the banking system. In that context I am comfortable with the position we have in saying the financial conditions are not stress-free and there is genuine risk, which is why we insist on the approach of reducing non-performing loans in the banking system.