Former Taoiseach (Prime Minister) Brian Cowen, in his first detailed account into Ireland’s banking crisis, blamed the financial crisis worldwide, regulators, the opposition and a range of other factors, but not himself when in government or the Fianna Fail party.
Cowen spent a day giving evidence of the build up to the bank crisis when he was finance minister.
He defended his term in office at the Banking Inquiry, set up by the Dail and Senate (the two houses of Parliament) in 2014 to establish why Ireland experienced a systematic banking crisis.
In a feisty performance, Cowen was reported in the Irish Examiner as blaming the banks, the regulators, the international crisis, the EU/IMF and a lack of power.
He said the “primary responsibility of the crisis rests with the banks themselves.”
“There was a lack of analysis by both the Central Bank and Financial Regulator in challenging the over concentration of risk in property,” Cowen said.
The international crisis was to blame because “access to funds and borrowings evaporated.” That meant the vehicle to move house prices to a more normal level was taken away.
Cowen fingered the EU/IMF for giving him no choice but to spare the bondholders. The government was left in no doubt that burning senior bondholders would mean no EU/IMF program.
He blamed a lack of power to intervene on spiraling bank lending during the boom, telling the inquiry, “I didn’t have that statutory power; that is an independent regulatory power.”
There was a lack of choice on the night of the infamous bank guarantee. “No option looked good – it was a case of taking the least worst option available,” he said.
Cowen denied he was too close to property developers. “You’re setting me up as some sort of guy who’s promoting cowboy speculators. I’m not. I don’t travel in those circles at all,” he said.
Cowen accepted a property bubble inflated during his watch, but his decisions were based on information available to him at the time, including a clean bill of health for Irish banks from international organizations the OECD, the IMF and the European Commission.
“I want to say to the Irish people that the government I led dealt with the financial crisis to the very best of its ability,” Cowen said.
He is due to give a second day of evidence to the committee later this week, concentrating on his time as taoiseach.