Brian Cowen (Laois-Offaly, Fianna Fail)

I will answer the Deputy directly. First of all, the difficulties we are facing in the economy, the cutbacks in expenditure and the tax increases with which we have to contend relate to the economic situation we are in, which relates to the economy itself, namely, the difference between what we are spending and what we are earning. As difficult as dealing with both this situation and the banking crisis is, if we did not have any banking crisis, we would still have these policies to pursue in terms of reducing our day-to-day expenditure and having a sustainable fiscal policy going forward. We are as mindful of this situation as anyone else in the House. We are implementing policies we believe are necessary to bring us back to recovery as quickly as possible so people can have a better future and we come out of recession. As we stabilise the economy and as our budgetary policy worked during the course of this year, as difficult as things are, we are now looking to the implementation of a four year plan to bring us back to growth, with all of the difficult decisions that involves. They are the right decisions for the state of the economy as it stands and it is because we want to get back to improving social services in due course on a sustainable basis and creating more jobs that we are taking these decisions. It is only by a consistent approach in being prepared to do that and having the political will to do it, as distinct from people talking about percentages and then coming up with policies that do not get us to those percentages, that we will actually be able to address the problems this country faces in every family and in every townland and in every village in the country.

My state of knowledge, as the Government state of knowledge, was based on the information that was being provided to it by the people who were serving, the regulators and the Central Bank and, as we know and as the reports point out, there are issues that have had to be reformed and had to be changed and we have changed them; we have brought in changes to address those issues, as we were recommended to do in those reports. Clearly, and it has been set out in terms of both the international and the domestic issues that affected this situation, there have been many reports and many recommendations that have come forward that confirm the analysis was wrong. External surveillance organisations, including the IMF, provided projections which did not turn out to be accurate either. That is no comfort to any of us who have had to deal with the outcome of the decisions that were necessary as a result of the financial system crisis with which we have had to contend and with which we still contend in the work we are doing.

As has been said in those reports, the primary focus of the regulatory system was on the liquidity issue. There is no doubt we had reached a situation on 28-29 September, as a result of what had happened over the weekend internationally and at home with deposits leaving, that it was necessary for us to bring forward something that would stabilise that situation and save the financial system. My state of knowledge was based on the advice we were getting. There was no other state of knowledge available to any of us and we were dealing with that situation based on those assessments that were before us.

Yes there were options but it was clear that on 28 September we had got to a point where we had a systemic problem, not simply a bank-specific problem, and there was no way in which we could take out of the equation any one of those institutions and in that respect, Anglo Irish Bank. In fact, Mr. Honohan in this report said that such a proposal would be an academic exercise since the disorderly failure of a bank that was not included in the guarantee would have had spill over effects right across not only the Irish economy but into the European banking system and the British banking system as well. In a recent current affairs programme on Monday night, Deputy Rabbitte spoke about this and has some knowledge and strong views on this area perhaps, but I take the point that he was saying there was incandescent rage with what we did from elements of British political circles. The point was this, we had no choice, we had to save the system here. The fact is we did not have a European-wide system in that case and we were the first country to introduce that guarantee system in the present crisis. It was subsequently taken up by other countries who were facing similar type problems. Those are the facts, that is the context in which we operated.

I am of the view - I state it for the reasons I have given, and I believe the reports are far more in favour of the decisions we took than any other suggestion that has been made - that the guarantee had to be decisive, assertive and had to confirm that we were going to stand behind the system at that time and it was that which avoided a disastrous, seismic economic shock in this country that would be far greater than what is being suggested.

When Deputy Gilmore mentioned that he did not agree with the guarantee for Anglo Irish Bank, what would have been the cost of letting that bank go at that time and in those circumstances? We would have had to pay up on the deposits that existed and that would have been far greater and the taxpayer would have to find billions of euros, including for credit unions and other pension funds, that were part of the deposit base of that bank. Let us be clear, we are not talking about some eclectic group of people in some other part of the world, we are talking about moneys that are part of the savings and part of the futures of working people in this country and people in credit unions and elsewhere. It was not an option and all of the objective evidence points to that.

People should consider that and get away from the game playing and get away, frankly, from the politics of smear that has been tried to be dressed up in some sort of respectable fashion, the smear that Deputy Gilmore has continued and has refused to withdraw that I made decisions, or the Government I led made decisions, that were about protecting personal interests rather than defending the common good and defending our country at a time of serious financial crisis. I reject that assertion with contempt. There is not one shred of evidence for Deputy Gilmore to make that contention except to continue with the political narrative from which he has drawn a reservoir of votes for the past two years at our expense or at my personal expense by suggesting I am an economic traitor. I am no economic traitor; I have sought to do this job to the very best of my ability with my colleagues in the common interest for the public good. I do not mind disagreement in political discourse but I still say to Deputy Gilmore, and say it to him honestly, as a person, as a colleague whom I do not personally dislike, despite the severity of that criticism, there is no basis in fact for that contention and it should be withdrawn because it does nothing for the debate and creating confidence in the integrity of our system in this country.

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