Cowen holds key to night of bank guarantee

IF the Bank Inquiry had already been gearing up to a one man show featuring Brian Cowen, then the evidence given by ex-Department of Finance Secretary General Kevin Cardiff just cemented the former Taoiseach’s role as the lynchpin.

The burning question remains a very simple one.

How was the massive decision to guarantee the banks taken on the night of September 29, 2008 without any forensic insight into their frightful finances?

After all, such was the concern about the banking sector at the Department of Finance they had a “secret” unit working on a potential crisis from as far back as May 2008 when Mr Cowen was still Minister for Finance, according to Mr Cardiff.

We also heard from Mr Cardiff that lobbying for a guarantee had started well before September, with the likes of former Anglo chief executive Sean Fitzpatrick, ex IL&P chairman Gillian Bowler and Davy Stockbrokers on the list of lobbyists.

One thing has becoming increasingly clear and it might go some way to answering that burning question. The banks called the shots, both ahead of the night and on it.

Quite simply, they arrived in Government buildings with a plan and didn’t budge until it was implemented.

According to Mr Cardiff, it was an Allied Irish Bank plan that the guarantee was based on, but that really doesn’t matter (we are told there are no copies of it left despite there being numerous drafts).

What matters is that a decision was taken at the highest level for a €440bn bank guarantee, spurred on by the most interested parties of all – the banks.

Alarm bells should have been going off at all levels of Government – it’s pretty evident now that Anglo, Nationwide and IL&P were already basket cases by the time of the guarantee.

And while Mr Cowen wasn’t alone on the night, with a number of other key players present including the then Attorney General and Minister for Finance, all key evidence is pointing to him as the ultimate decision maker.

It also beggars belief that qualified advisers like the NTMA’s Brendan McDonagh were there on the night, yet they were only consulted at the end and once the structure of the guarantee had been agreed.

Earlier, Mr Cardiff told the inquiry that in his view Irish banks were already insolvent on the night of the guarantee.

He added that in his view Mr Cowen had already decided the guarantee was the way forward on the night.

He also said that Mr McDonagh had been invited to Government buildings by him because of his expertise. Yet he was left sitting in another room away from the action most of the evening.

Earlier evidence from other players pointed to a night of chaos, and today’s evidence was no different.

We all know that bad decisions are made in stressful, chaotic situations.

Contrary to what some commentators think, focusing on the night of the bank guarantee is not missing the bigger point, it is central to it – just a couple of years later the EU/IMF/ECB troika arrived in town and the €64bn bailout was foisted upon us.

The two episodes are inextricably linked given our addiction to the property market for most of a decade.

Blaming someone is not the exercise of the inquiry – but getting reasonable answers is.

No doubt these key questions, and others, will be hammered out when Mr Cowen gives evidence later this summer.