Brian Cowen to tell inquiry that Ireland was ‘bounced’ into a bailout

Former taoiseach Brian Cowen is expected this week to back previous suggestions that Ireland was “bounced” into a bailout.

Returning before the banking inquiry, the former leader of Fianna Fáil is also expected to criticise the pressure applied on Ireland by the ECB and its then president, Jean-Claude Trichet.

Mr Cowen is scheduled for a second appearance before the inquiry on Wednesday, where the focus of questioning by TDs and senators will be on his time as taoiseach overseeing the economy, the granting of the bank guarantee, and Ireland’s decision to enter a bailout programme.

Mr Cowen is expected to say that it was decided on the night of the September 2008 bank guarantee that it was not an option to let Anglo Irish Bank go under, as this would have had serious implications for the whole banking system.

Evidence given to the inquiry to date suggests that the then finance minister, the late Brian Lenihan, had a private conversation with Mr Cowen on the night, at which Mr Lenihan is said to have changed his mind about Anglo and agreed on the guarantee.

The inquiry has heard that Mr Lenihan and Department of Finance official Kevin Cardiff both favoured nationalisation of Anglo, as opposed to the broad guarantee which was introduced.

Mr Cowen will also address a letter sent by Mr Trichet in November 2010 whereby the ECB threatened to withdraw funds if there was no bailout request. He is expected to outline the difficulties this pressure put on his administration.

Crucially, Mr Cowen is expected to back a previous suggestion by Mr Lenihan, made in a television documentary, where he claimed Ireland had been bounced into agreeing to enter an international bailout programme.

Mr Cowen is expected to be asked whether the design of the bank guarantee was one of the reasons that eventually led to Ireland having to enter a bailout.

Other figures scheduled to appear before the inquiry this week include Michael Somers, the former chief executive of the National Treasury Management Agency, and financier Derek Quinlan.

Mr Somers is expected to be asked what he knew about any discussion or proposals around the bank guarantee, before it was agreed, as well as what level of assistance the NTMA provided to Irish banks.

Mr Quinlan is expected to be asked about his investment firm Quinlan Private, and its relationships with the banks as well as with politicians.