Cowen: Banking bailout was right decision

TAOISEACH Brian Cowen has stood over the bank guarantee scheme, despite the fact the Government was warned of the major risks in taking such an approach just days before it was implemented.

Financial advisers Merrill Lynch cautioned that a blanket guarantee could be “a mistake” and affect the country’s sovereign credit rating, making it more expensive for the Government to borrow money. The warning came in a meeting involving Merrill Lynch advisers, Finance Minister Brian Lenihan, departmental officials, the Central Bank and Financial Regulator on September 26, 2008.

Details of the warning emerged in partially censored Finance Department documentation released to the Dáil Public Accounts Committee, which is examining the collapse of the banking sector. The documentation also showed the then-secretary general of the department, David Doyle, warned on September 25, 2008, that the Government “would need a good idea of the potential loss exposures” within Anglo Irish Bank and Irish Nationwide prior to making a decision on any intervention.