Opposition criticises 'catastrophic decision' to offer blanket bank guarantee

The Opposition has today rounded on the Government's management of the 2008 financial crisis.

Fine Gael Finance Spokesman Michael Noonan said the Taoiseach and Finance Minister Brian Lenihan torpedoed the Irish economy through a series of catastrophic decisions.

The comments came in the wake of the release of documents by the Public Accounts Committee which show that Merrill Lynch advised Minister Brian Lenihan against a blanket guarantee, and that former Financial Regulator Patrick Neary said there was no evidence to suggest Anglo Irish Bank was insolvent as a going concern

“The new facts rubbish the images conjured by the Taoiseach and Finance Minister of a Government being bounced in the early hours of September 30 into the catastrophic decision to offer a blanket guarantee to Anglo Irish Bank on the basis of poor advice by the ill-prepared Financial Regulator,” Mr Noonan said.

“They confirm the judgment of Central Bank Governor Patrick Honohan that, even in hindsight, the blanket guarantee was a mistake.”

Mr Noonan called on the Taoiseach and Mr Lenihan to answer why the advice from Merrill Lynch was not acted on and who was pushing for a blanket guarantee.

He added: “At the very least, both the Taoiseach and the Finance Minister are guilty of misrepresenting the nature of the advice given to them on the guarantee, and knowingly exposing the Irish taxpayer to unknown but potentially huge losses in Anglo Irish Bank.”

A PwC report on Anglo's lending the same week revealed that only €2.2bn of its €75bn loan book could be converted into useful collateral.

Five options to prop up the banks were considered at a meeting on September 25, 2008 – ordinary financial support, a secured lending scheme, guarantees, nationalisation and a bad bank.

Merrill Lynch gave a presentation – now partly censored – the following day which found that a guarantee would be the most contentious in European eyes.