‘We could see the world collapsing’ on night of guarantee

A state body specifically tasked with giving technical financial advice to the Government was locked out of discussions with ministers on the night of the bank guarantee, and had just “90 seconds” to raise concerns.

The situation was revealed by Brendan McDonagh, the current Nama chairman and former National Treasury Management Agency official at the banking inquiry .

Speaking during a nine-hour meeting with the cross-party group, he said at 7.45pm on September 29, 2008, he was called by then Department of Finance secretary general Kevin Cardiff and told to attend Government buildings without explanation.

After arriving, he and a colleague were left in a room with then Department of Finance assistant secretary general William Beausang and Arthur Cox representative Pádraig Ó Ríordáin from 9pm until 1am.

While they knew a lengthy meeting was taking place nearby, they were unaware of what was being discussed and were instead left watching a TV “stuck on CNBC” showing the Dow Jones index collapsing by 700 points.

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“We could see the world collapsing,” he said. At 1am, Mr Cardiff appeared to inform the waiting individuals of the bank guarantee.

Mr McDonagh said he immediately raised concerns about the inclusion of Anglo Irish Bank and Irish Nationwide. He said Mr Cardiff would have already known the scale of the deal and the lack of information on which it was based.

The then NTMA official said if asked he would have advised that the remaining Irish banks be nationalised.

However, he said the blanket guarantee decision was presented as a “fait accompli” and that his only discussion with then taoiseach Brian Cowen was a 90 second “technical” conversation.

Mr McDonagh said in the fortnight before the guarantee he raised concerns over both Anglo and Irish Nationwide, and confirmed to the banking inquiry he did not believe they were “solvent” in September 2008.

He said the NTMA had decided to put its money in the Central Bank as opposed to Irish banks just weeks before as it was “sceptical” about the sector’s stability, and that the Department of Finance would have been informed of the concerns through the NTMA’s then CEO Michael Somers.

However, despite the concerns he said: “Nobody came in to us or contacted us. People were coming in and out of rooms. At 1am, we were told the Government had decided to guarantee the banks.”

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