Professor Gregory Connor:

There are certainly precedents for the Central Bank. The economics profession was also in this overconfident mindset. I do not want to overstate the error of the Central Bank. It was in the overconfident mindset like many other bodies. It should have had somebody, however, to say it should look at the banking system. AIB knew there were problems. It asked Professor John FitzGerald, as the committee has heard in testimony, to undertake a risk analysis to see if there was a problem. The Central Bank should have said it would look at this problem and then follow on it. Professor Honohan, in his document, goes through the many avenues and tools that the Financial Regulator and the Central Bank had. In his document, he states that if one looks at the powers the Central Bank Governor had up to 2008, it is clear the Central Bank and Financial Regulator had plenty of power to both act on concentration ratios. There was too much concentration on property. They should have gone to Anglo Irish Bank and the other banks and said, "No, this is too much property lending and is not allowed. You can lose your banking licence. Stop. No, this is too much liquid and very unstable funding from foreign debt capital. Stop". They had the power to do it.

In the then environment, as it has been said to me and Professor O'Kelly on this paper, there was a general overconfidence and it would not have been in the spirit of the times. I do not want to oversell it in that sense.