Banking Inquiry told soft landing a desire

The only reason the infamous “soft landing” theory was accepted by the Department of Finance was because Government wanted it to be true and a “don’t rock the boat” policy was in place, a former senior department official has claimed.

Former assistant principal officer Robert Pye issued the criticism of the boom-time Government — one of a series of written submissions to the bank inquiry from witnesses who have not been asked to attend public hearings.

According to the senior official, despite clear concerns from economists and independent experts, the soft landing view — which previous evidence shows was never formally examined by the department —was accepted by civil servants because Government wanted it to be true.

Mr Pye said developer and household borrowing issues were ignored and not flagged as risks, and that senior managers regularly lost the ability to contradict what was the overall view with a “don’t rock the boat” policy taking over at exactly the period when independent voices needed to be heard.

He said bluntly that politicians “got” what they wanted from any formal reports at the time.

The claim was one of several put forward in a batch of more than 20 written submissions released last night.

Among others was that of then-agriculture minister and future tánaiste Mary Coughlan, who while apologising for the crash, said “only time will tell” if the Government made the right decisions during the crisis.

Former Central Bank and financial regulator non-executive board director Deirdre Purcell said the Central Bank was regularly forced to give up on plans to remove specific bank bosses because the moves were strongly resisted by the firms.

Ms Purcell was also critical of the Central Bank, which she said appeared to “err on the side of caution” and was careful not to “spook” the markets.

Meanwhile, Sinn Féin has joined Fianna Fáil in calling for answers from Taoiseach Enda Kenny over how his evidence to the bank inquiry was contradicted by information given by former Anglo director Matt Moran at Thursday’s public hearing. In his own evidence in July, Mr Kenny denied he spoke to Mr Moran while in opposition in November 2008 about the possibility of Anglo Irish becoming an off-shoot of Bank of Ireland, and a recapitalisation plan Fine Gael was putting forward.

However, Mr Moran confirmed both issues were discussed, a situation the opposition said last night needs to be clarified immediately.