Report: Bank guarantee made Ireland look foolish

The Government did not know what it was doing when it tried to shore up the banks in 2008, as it thought the banks just needed money when in fact they were broke, a study by the European Commission says.

The blanket guarantee — which amounted to twice the size of the economy — made Ireland look foolish internationally, undermined its credibility, and turned the banking crisis into a State debt crisis, according to a review of the bailout.

The signs of an overheating economy from the property bubble were evident from before the banking collapse, but the EU, the OECD, and the IMF all missed it, the commission’s report adds.