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Why was this man left outside the room on the night of the guarantee?

Brendan McDonagh spent four hours at government buildings on the night of 29 September 2008.

Brendan McDonagh at the banking inquiry today
Brendan McDonagh at the banking inquiry today
Image: Oireachtas TV

A DIRECTOR AT the State’s treasury agency, the NTMA, has said he would have advised the government that Anglo Irish Bank and Irish Nationwide (INBS) were “broken institutions” that should have been nationalised and not guaranteed in 2008.

Brendan McDonagh, who is now the CEO of Nama, was speaking before the banking inquiry this afternoon when he repeated previous evidence that he had been left outside the room where negotiations were taking place on 29/30 September 2008.

He has previously told the inquiry  that he was called to government buildings at around 7.45pm on the night of the guarantee. After arriving at around 9pm, McDonagh and another NTMA official were left outside the main meeting room for some four hours. 

He told the inquiry in April that he was informed at 1am on the morning of 30 September that the government had decided to guarantee all assets and liabilities of the six main financial institutions.

Asked today by Sinn Féin’s Pearse Doherty what advice he would have given to then-taoiseach Brian Cowen if he had been in the room, McDonagh said:

If he had asked me I would have said: ‘You’ve got to nationalise these two institutions and try and deal with the four remaining ones as best we can’.

mcdonagh 2

McDonagh said he takes the word of former Department of Finance officials David Doyle and Kevin Cardiff that the views of the NTMA were communicated to Cowen and then-finance minister Brian Lenihan on the night.

The inquiry intends to write to Cardiff to clarify specifically that he put the NTMA’s view – that Anglo and INBS were “broken institutions” – to Cowen and Lenihan on the night. 

Yesterday, Cowen told the inquiry the NTMA’s position was known during the discussions and insisted “they were in the loop”. He also said:

There wasn’t a question that the NTMA position wasn’t known in the room. It was.

Cardiff told the inquiry last month that the fact that the NTMA had a different view was presented to the Taoiseach and other people in the room.

‘Running out of money’

McDonagh said today there had been no “substantive discussion” involving himself and NTMA colleagues about a bank guarantee in the months, weeks or days leading up to the decision.

He said the agency’s strong view was that both Anglo and INBS should have been nationalised on the night as opposed to being included in the broad guarantee as eventually transpired.

McDonagh said the agency had always been sceptical about the business model of the two now-defunct banks. He said this was due to their over exposure to property market lending.

He later said that on the night of the guarantee Anglo was being forecast to lose up to €3 billion in the following 48 hours while Irish Nationwide was also losing “liquidity rapidly”. He added:

If you can’t pay your debts when they are due, you are effectively insolvent. These institutions were rapidly running out of money.

Earlier: Financier compares himself to Ronaldo, says emigrating was “very painful”

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About the author:

Hugh O'Connell

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