Professor John FitzGerald:

While I did not publish research, I was very concerned as an economist. I sat through a series of papers in Warsaw which showed a dangerous situation developing in the Polish market. Through the Irish ambassador, I then met a number of people and heard Irish developers wanted to buy the Villanova suburb of Warsaw for billions of euro, and it scared the wits out of me. It was not something in which Irish banks should have been involved and that is why I was concerned and wrote to the Financial Regulator. I subsequently talked to somebody in AIB. My concern was AIB might be in a double exposure situation. Whether it was correct or not, somebody in AIB told me that one of the areas of concern was whether mortgages were denominated in Swiss francs or euro and that the bulk of mortgages in Poland were denominated in Swiss francs. There is a problem given the way the Swiss franc has gone. I had a number of concerns. In the report we did for the European Commission as EUROFRAME, we referenced this and in the report published in spring 2006, I did an appendix - it is on the website in the public domain - about the concerns about both the Irish and Spanish housing markets. When we presented the report, the European Commission did not quibble with me about the Irish situation but brought in a Spanish expert to say Spain was not as vulnerable as I suggested. It was part of a process whereby information came my way and I was concerned.