Joan Burton (Dublin West, Labour)

Even the most pessimistic observer could not have foreseen just how calamitous a decision the 2008 bank guarantee has turned out to be. The date of 29 September 2008 is as steeped in infamy in Ireland's history as Pearl Harbour was for the generation of Americans led by President Franklin Roosevelt.

I propose to outline one case. Professor Morgan Kelly was attacked with vitriol by the Minister for Finance in this House in January 2009 for daring to suggest that the bailout of Anglo Irish Bank could cost the taxpayer as much as €15 billion. What innocent days we had barely 21 months ago. If only the cost of Anglo Irish Bank could have been confined to €15 billion. What was shocking then has turned out to be a trifle. Professor Kelly, who was excoriated in public and private, can hold his head high today whereas the reputations of the Taoiseach, Deputy Brian Cowen, and Minister for Finance, Deputy Brian Lenihan, have been shredded as umpteen billions are carted into the Anglo Irish incinerator, notwithstanding their vulgar promises to Irish people that their policy would be the cheapest bank bailout in history. The Taoiseach and Minister hate to be reminded of that example of pure hubris or of the promise that Ireland, the first country into recession, would be the first out of recession, one more example of the triumph of vanity politics over reason and experience.

Today, the Minister for Finance has to look back on that fateful night of two years ago and see the complete bonfire of the vanity he displayed that week. Charitably he may be given a high score for sincerity and effort but I am afraid a hopeless score for political and economic judgment. Were he a general in a war, whether at the Somme or Iwo Jima, there would be nobody left alive.

If the only price to be paid was the political reputation of these two Brians, we could shrug it off but alas, the price of their flawed judgment on that day and in the months and years prior to it has turned out to be astronomical and has left a bitter legacy for all our people to endure. The shocking scale of the current banking crisis in Ireland has brought unwelcome attention to Ireland at a bad time but we should remember that banking crises have been a regular enough occurrence and usually follow similar paths. Ireland's story is not that unusual and reflects the astonishing lack of good authority displayed by the Taoiseach during his tenure in the Department of Finance. All the signs were there of troubled skies and storms ahead but he refused to pay any attention to the weather forecast and recklessly carried on as before with the very same policies that encouraged disastrous lending practices to developers and home buyers.

Northern Rock in the UK was a bank with a business model similar to Anglo Irish Bank. It collapsed at an early stage long before Lehman Brothers. The Northern Rock incident was the point when the Irish authorities, political as well as regulatory, should have got a wake-up call and taken action to stave off the Anglo Irish Bank disaster that was coming down the track. Instead of heeding the wake up call, the then Minister for Fiance, Deputy Brian Cowen, pulled up the duvet cover and went back to sleep. Over the next months it must have become clear that Irish banks were sitting on big losses and had severe solvency problems and not just liquidity issues. Insolvency destroyed Northern Rock and that dreaded word surely had to feature in the minds of those in charge.

On Sunday, 16 September 2007, the then Minister, Deputy Cowen, following the Northern Rock debacle, vowed that the State would not bail out banks from the consequences of their own reckless lending policies. Boy, did he do a U-turn! Then came the St. Patrick's Day massacre of Anglo Irish Bank shares in March 2008, another wake-up call even louder than the earlier one he so wilfully ignored.

The events of September 2008 were particularly dramatic but the Anglo Irish Bank contagion had already taken root and was infecting the entire economy. The Irish banking disaster has followed all the steps that feature in the textbooks on bank failures. The Government has made all the classic mistakes and allowed the banks to deceive it this day two years ago in September 2008 that they were fundamentally sound and merely enduring short term liquidity problems. So Ministers spent months pretending — to the people at any rate. Perhaps they knew differently privately.

The documents already published display an incredible culture of denial in Merrion Street. The true picture was revealed in an appalling drip-feed manner right up to the shock and awe statement in the week before Easter in late March this year. The Minister's response was to say, "At every hand's turn, our worst fears have been surpassed". What were those worst fears and why did he not incorporate those fears into his actions? A wise leader hopes for the best but prepares for the worst. That is what wise leaders and generals do. We are in an economic war in this country and our people have been visited with sanctions because we have lost the war that puts us in mind of what happened to the Germans after the First World War. That is where our desperate generals on the other side of the House have led us. Deputies know the quote about the First World War: "Lions led by donkeys". Look at the Government benches and see the calibre of our miserable generals. There are many adjectives I could use to describe the leaders of this Government. "Wise" is not one of them.

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