Brian Cowen (Laois-Offaly, Fianna Fail)

-----supporting the Garda and the legal system in their independent investigation and prosecution of any criminal actions in the banking sector; the introduction of a radically changed regulatory system; and new rules on bank directors and corporate governance.

The Governor's report demolishes a number of mistaken views that have arisen which some have used in an attempt to damage the Government. These include the incorrect suggestion that policy advice prior to the crisis suggested that banks were inadequately capitalised and that the property markets would collapse and that the Government ignored that advice; the mistaken view that a widespread guarantee of the Irish banking sector was not the correct decision; and the myth that the timing of the decision to nationalise Anglo Irish Bank resulted in significant losses for the taxpayer. Due to the the damage to Ireland's reputation caused by these misconceptions it is important to review each of these in turn.

I have previously argued that the balance of evidence and advice to the Government was that Irish banks had sufficient capital and that a soft landing to the property sector could be expected. While this advice proved to be wrong, the suggestion that the Government was advised differently and ignored this advice never had any truth whatever. I note also that the two reports confirm that the official advice to the Government both from the Central Bank and from the International Monetary Fund and OECD at the time was that the banks had sufficient capital to absorb the likely losses but that there were vulnerabilities and risks.

We now know grave mistakes were made in the judgment of the capital adequacy of the Irish banks and the assessment of future loan losses and on the outlook for the property sector. It is, however, important to note that no one in the independent authorities ever advised the Government that the capital requirements were not sufficient or that higher capital adequacy ratios should be imposed. This is now confirmed by the independent reports and in the Governor's report he notes that the language of successive advice given was too reassuring throughout.

The independent report by the Governor also vindicates the Government decision to introduce an extensive guarantee.

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