Banking Inquiry: Guarantee should have been temporary

The bank guarantee should have been designed as a temporary measure until losses in the banks could be determined, the economist and broadcaster David McWilliams told the banking inquiry yesterday.

He told the then finance minister Brian Lenihan any guarantee should be conditional, and not open-ended as that might lead to the State picking up debts from risk capital.

“I said that you have to introduce a holding guarantee to buy you time until you find out the facts,” he said. He added that at no stage did he tell the minister a guarantee should include subordinated bondholders.