Cowen's tenure as Finance Minister criticised in banking reports

The two reports into the banking crisis lay some of the blame on Taoiseach Brian Cowen, saying his 2007 Budget (when he was Finance Minister) added markedly to the overheating of the economy.

The two reports into the banking crisis lay some of the blame on Taoiseach Brian Cowen, saying his 2007 Budget (when he was Finance Minister) added markedly to the overheating of the economy.

The reports add that Mr Cowen introduced excessive spending by the Government.

The reports, published this evening, also outline regulatory failure and say the crisis was "in crucial ways, home-made".

The Regling/Watson report point to the opportunities to mitigate the risks and create a cushion to the recession, but that these opportunities were not taken. Instead, "the policies of government and culture in the banks “added fuel to the fire".

Budget 2007 – Brian Cowen's second last as Finance Minister and just before the election - is highlighted as "adding markedly to the overheating of the economy".

A second report by the new Governor of the Central Bank has found that in the years after 2004 – when Brian Cowen became Finance Minister – Government spending increases become embedded in the system.

Patrick Honohan goes on to say that spending rose by more than 11% in 2007 and 2008, describing it as "an unfortunate last burst that boosted the deficit at almost the worst possible time".

The Governor's report also highlights a comprehensive failure of bank management and an unwillingness by the Central Bank and Financial Regulator to “rock the boat”.

In the coming weeks, a Commission of Investigation will be established to inquire into the issues raised in these reports, with its findings expected before the end of the year.

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