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Newspaper headlines on 30/9/2008. Mark Stedman/Photocall Ireland
Bank Guarantee

Here are the questions that need to be asked about the bank guarantee

That is, according to the Public Accounts Committee, which wants to hold a public inquiry into the collapse of Ireland’s banking sector.

THE PUBLIC ACCOUNTS Committee, one of the most powerful in the Oireachtas, has published its report on the crisis in Ireland’s banking sector. It is the first step needed before a full, public inquiry can be held and contains a huge number of questions that it wants to see answered.

Despite the number of investigations already completed, the committee found that a “major knowledge gap remains in relation to the events leading to the bank guarantee”.

The report outlines a number of questions that the group, which is led by deputy John McGuinness, says should be answered.

“It is not unfair to say that the banks almost brought down the State and if ever an issue required serious follow up by parliament, surely it is this,” he said.

Here are just some of the questions, relating to that fateful night of 29/30 September 2008, that the PAC want answered during a much-anticipated inquiry:

The night of the guarantee

  • Who was present in Government buildings on the night of 29 September 2008?
  • On the night of the guarantee, what information did AIB and Bank of Ireland provide to officials as part of their presentations? What were their exact proposals?
  • To what extent do written records exist of the events leading up to the guarantee, and the guarantee itself?
  • What was the involvement of other Ministers in the decision-making process in September 2008 and why does Cabinet appear to have been side-lined? Was authority delegated by the other Ministers to the Taoiseach and the Minster for Finance?
  • More specifically, what role did Cabinet have on 28 September 2008?
  • Did civil servants and any Cabinet Ministers discuss the various options being considered on 29 September with representatives of the banks? If so, what views were expressed and by whom?
  • Do written records of these discussions exist? If not, why not?

Prior to that night

  • What was the precise sequence of events in the period of weeks leading up to the guarantee?
  • What role, if any, was played by the Cabinet in the run up to the events of the night of 29 September 2008?
  • Who were the external advisors (formal and informal) during the crisis management period and what were their roles?
  • During the autumn of 2008 it was believed that there was a liquidity rather than a solvency issue; how was this conclusion reached?
  • During the period leading up the to the bank guarantee, what, if any, contact did the Department have with overseas bodies such as foreign governments, the European Central Bank or the EU Commission concerning Irish banks or monetary stability?
  • When was the Department of the Taoiseach involved in discussions concerning the bank crisis? What papers were sent to, received from, or prepared by that Department for the Taoiseach‘s role in the crisis management meetings? How did its officials contribute?
  • On whose final say was it decided to include subordinated debt in the guarantee scheme? What role, if any, did non-elected external advisors play in the decision to go for a full guarantee? What advice did they give to the Minister for Finance or the Taoiseach? At what point was any such advice given?
  • Merrill Lynch included a ―protective custody‖ option in their note of 26 September 2008, which suggested this as an interim step before a guarantee. Was this seriously discussed and, if so, why was it rejected?

The Central Bank’s role

  • What was the basis for the Central Bank‘s belief in the autumn of 2008 that the crisis was one of liquidity rather than of solvency?
  • To what extent did the Central Bank communicate concerns to the Minister for Finance and the Department of Finance?
  • Was the ―revolving door‖ system perceived to be a problem at the Financial Regulator? (The revolving door system is where individuals switch between the public and private sector over the course of their career, which has certain advantages but also drawbacks in that there is a risk that public officials may act in a self-interested fashion to advance their future career prospects within the private sector.)
  • On the foot of warnings about the potential falls in Irish house prices in 2007 what actions did the Financial Regulator take?
  • What was the nature of the Central Bank‘s involvement in the decisions leading up to the guarantee on 29 September 2008? What advice did it give to Ministers? What, if any, contacts did it have with the European Central Bank or other central banks concerning the financial stability of Irish banks in the weeks before the guarantee?

On Anglo

  • Who decided that the report on Anglo showing prudential deficiencies was not high priority?
  • When did the Central Bank know about the irregular ILP deposits with Anglo?
  • When were Government Ministers and senior advisers made aware of the directors‘ loans issue and the back-to-back loan arrangement between Anglo and ILP? Was this information known when Anglo was covered by the guarantee?

On the housing crisis

  • Given that Professor Morgan Kelly warned publicly in July 2007 on the likely extent of falls in Irish house prices and the effect of these losses on the Irish banks (Anglo/INBS in particular), what action was taken in the Department of Finance to check the analyses?

After the guarantee

  • Did any of the banks incur liabilities between October 2008 and January 2009 that might have been avoided if their senior management had been changed following the introduction of the guarantee?

The committee has said it is of the view that there is an “urgent need” for a parliamentary inquiry and that it should be the group to conduct the investigation through a non-partisan approach.

Members of the committee have warned that any inquiry will not apportion blame but will get to the bottom of exactly what happened.

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