The former Fianna Fáil leader confirmed the phone call took place just as the prospect of a bank guarantee was being debated on September 29, 2008, but insisted he was never lobbied to force through the measure.
Speaking during his second Oireachtas bank inquiry meeting, Mr Cowen confirmed he contacted Central Bank director and economist Alan Gray as cabinet debate raged over the guarantee plan.
Mr Cowen told the inquiry Mr Gray supported the idea, but said it should have a limited two-year lifespan. It appears that at this stage that Mr Cowen definitively overruled then finance minister Brian Lenihan and insisted a blanket guarantee was the best option.
Previous witnesses have said that then Anglo chairman Sean Fitzpatrick and chief executive David Drumm arrived unannounced at the Central Bank on the morning of the bank guarantee on September 29, 2008, to ask Mr Gray and others for help with crippling mounting debt – a request which was rejected.
However, until now it had not been known that Mr Cowen sought advice from Mr Gray on a guarantee hours after this meeting.
Mr Cowen said yesterday Mr Gray did not tell him about the meeting with FitzPatrick and Drumm.
The economist, who was appointed to the Central Bank board by Mr Cowen in 2007, was also one of five individuals to attend an infamous Druids Glen round of golf between the then taoiseach and senior Anglo Irish officials on July 23, 2008.
The meeting was organised by Mr Cowen’s close friend and then recently retired Anglo director Fintan Drury, after the then taoiseach asked to meet a number of financial experts to discuss volatility in the economy.
Mr Drury brought Mr Fitzpatrick and Anglo board director Gary McGann to the meet, as well as Mr Gray. The only other people in attendance were Mr Cowen and his driver.
After describing the meeting as a “fishing trip” on growing issues in the economy, which at no point saw Anglo’s difficulties raised, Sinn Féin finance spokesperson Pearse Doherty suggested the “narrative stretches credibility”.
However, Mr Cowen countered: “As God is my witness, that is the truth.”
He said nothing “inappropriate” took place, that it was “nothing to do with Anglo” and that “if people want to talk about conspiracy theories, I can’t stop them”.
“There’s just nothing in it... I didn’t dictate the company,” he said, adding it is a question of his “integrity as a person”.
A number of other inquiry members returned to the issue including Socialist TD Joe Higgins, Fine Gael TDs John Paul Phelan and Kieran O’Donnell, and Labour Senator Susan O Keeffe.
Noting the fact Mr Cowen said the meeting was about asking for expert views on the economy at a time when Anglo itself saw its share price drop 20% months earlier and was months away from a multi-billion euro nationalisation, Mr Higgins asked: “On reflection, could you have sought advice from a more capable panel?”
At his first inquiry meeting last week, Mr Cowen confirmed he went to a private Anglo Irish function on April 28, 2008, just a fortnight before becoming taoiseach and a month after the Irish stock exchange crisis known as the St Patrick’s Day Massacre.
This evening meeting – previously described by Mr Cowen as a purely “social” event – took place on the same day Mr Cowen and others received an internal Department of Finance e-mail about the bank’s difficulties, reports yesterday showed.
However, despite confirming yesterday he did not meet any other banks during the period, Mr Cowen stressed to Labour Senator Susan O Keeffe: “I was not personally lobbied. That’s [not lobbying] the way I operate.”
Meanwhile, the former taoiseach has also staunchly defended the controversial bank guarantee as the the “least worst” option available at the time.
The ex-Laois-Offaly TD said the guarantee option was the “safer option” as it was “time limited” and that nationalising Anglo would be an “open ended” guarantee.
He said allowing the bank to fail was also not an option after then Central Bank governor John Hurley told him this move would “set the country back 25 years”.
While accepting “we lost five or six years” anyway, Mr Cowen said what officials faced was of “Wall Street 1929” proportions.
The former taoiseach said by the weekend of September 27-28, the pressure from sub-prime mortgages and internal Irish issues meant Anglo and Irish Life and Permanent were likely to run out of funds in “days rather than weeks”.
The following day, Monday, September 29, Anglo lost €2bn leading to Mr Cowen calling the now infamous late night meeting which set up the guarantee after then ECB president Jean-Claude Trichet told Mr Hurley Ireland was “on its own”.
Mr Cowen said he did not “over-rule” then finance minister Brian Lenihan’s nationalisation call, and simply told him a guarantee was a better option because it would provide more market confidence. He denied this was “confrontational”.
When asked why he ignored “your own men”, he said this was based on advice from the Central Bank and others, and that if he ignored that he would be equally blamed.
The former taoiseach confirmed Mr Lenihan was not in the room when it was decided to include unsubordinated bondholders.
He rejected criticism from Fine Gael TD Eoghan Murphy that Department of Finance reports warning of a crash were ignored, and said he did not make up his mind on the need for a guarantee until the night it was decided.
Mr Cowen accepted responsibility for no notes being kept of the meeting and said he wished there were as it would clear up certain concerns, but suggested notes written by then attorney general Paul Gallagher days after the historic event may be available.