Construction Industry Federation chief Tom Parlon said the group did not realise that banks were issuing loans with poor "due diligence".
Mr Parlon and his predecessor Liam Kelleher have been giving evidence at the Banking Inquiry today.
Mr Kelleher earlier said that the industry had no realisation of how banks were lending themselves to the brink of collapse.
Mr Parlon said the lobby group only found out afterwards just how easily some people were being given loans.
"I think it's apparent now that in terms of due diligence, for loans and so on, that there was major deficiencies … and that became apparent to Nama as well when they took over loan packages from banks to discover that the actual due diligence was very poor," he said.