Cowen reveals 'regret' over economic decisions

Taoiseach Brian Cowen tonight admitted he deeply regretted economic policy decisions he made ahead of the banking crisis.

Responding to two highly critical reports on the financial meltdown, Mr Cowen - who was finance minister during the boom years – admitted not enough action was taken to make banks less vulnerable to the property bubble.

But the Taoiseach refused to shoulder all the blame and insisted many mistakes made were based on fundamentally flawed projections from the Central Bank, the International Monetary Fund (IMF) and the OECD.

“I agree with the assessment in the reports that a more restrictive fiscal policy would have helped in slowing the economy,” he said.

“Hindsight is always clear and obviously we would have taken such a course if we had known of the scale of the property collapse which was facing the country. I deeply regret that.”

Mr Cowen claimed the reports vindicated the approach taken by the Government in dealing with the banking crisis – and called on lenders not to forget their responsibilities.

“The Governor’s report demolishes the contention that a widespread guarantee was not necessary and highlights the enormous damage which would have resulted if a bank was let fail,” he added.

“We have taken decisive action to deal with the mistakes which have been made but we need to ensure that the banks now start to deliver on their commitments to the Irish public and to economic recovery.”

The Taoiseach also defended public spending claiming it was rubber-stamped for roads, schools and hospitals.

“There were many saying at the time we weren’t spending enough,” he continued. “These investments benefit the quality of life of our citizens and strengthen the prospects of recovery.”

Mr Cowen, flanked by current Finance Minister Brian Lenihan and Green Party Communications Minister Eamon Ryan, claimed hard lessons had been learned.

“The reality is that we’re in a completely different context now,” he added. “The outcome that we now face is a very challenging one for all our people and I deeply regret that.”

Mr Lenihan, who is battling cancer, said the two documents were only a step on the way to a full probe.

“There are obvious and compelling arguments in these reports about fiscal policy,” he said. “These reports are preliminary scoping reports, which are intended to point the way to more detailed examination by a commission of investigation.”

Claiming the traditional inquiry route would be too protracted and costly to the taxpayer, the minister said there would be a six-month time limit on the work of the commission.

Mr Lenihan also said he would make himself available to answer questions from the Joint Oireachtas Committee on Finance and the Public Service – in particular on the period around the end of September 2008, when the decision was made to introduce the bank guarantee scheme.