Pat Rabbitte (Dublin South West, Labour)

As the Honohan report makes crystal clear, early on a policy decision was made not to allow any bank, derelict or otherwise, to fail. The report states:

The "no failure" policy also took the question of optimal loss-sharing off the table. In contrast to most of the interventions by other countries, in which more or less complicated risk-sharing mechanisms of one sort or another were introduced, the blanket cover offered by the Irish guarantee pre-judged that all losses in any bank becoming insolvent during the guarantee period – beyond those absorbed by some of the providers of capital – would fall on the State. Given the "no failure" policy, a guarantee with its costs were inevitable.

That is the critical point, given the no-failure policy, that was the logic of where we were by 29 September.

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