Brian Cowen at the banking inquiry: five things we learned

1. He’s very sorry for the austerity that followed the economic crash in 2008.

“I am sorry that the policies we felt necessary to put in place in responding to the financial crisis brought with it hardship and distress to many people.

“The human cost of dealing with this crisis, which we sought to mitigate as best we could, was the most difficult aspect of the decisions we had to make.

“What we did was about restoring financial stability to the country. We must learn from this difficult experience and ensure that it doesn’t happen again.”

2. The bank guarantee was the most “decisive step” that the government could take in September 2008 to deal with the banking crisis.

"It was clear that we were on our own. We had one shot at it. If we did not get it right, Ireland, we were told, would be set back 25 years. We had to go with the best information available to us at the time."

3. Burning senior bondholders in late 2010 would have resulted in Ireland being locked out of an EU-IMF bailout.

“We were left in no doubt that burning bondholders would have meant no EU-IMF (bailout) programme; it was one or the other.

“We assessed that there was a far greater financial and economic benefit to the country entering the programme at the time than to burn remaining bondholders.”

4. He regrets that the level of current spending growth was not lower during his time as Minister for Finance (2004 to 2008).

“However, even a slower, more modest rate of growth in spending on health and education and welfare, would not have eliminated the need for the painful fiscal adjustments we saw from 2008 on.

“That adjustment was driven by the global financial crisis and the collapse in economic activity, a collapse which was more pronounced in our country because of the level of construction activity taking place in Ireland at the time.

“Contrary to what some are now trying to suggest, I was concerned about the potential vulnerabilities and risks arising from the rapid escalation in property prices, which was a recurring theme in risk assessments.”

5. He was not “beholden” to “property market interests”and took measures to minimise the vulnerabilities in the banking sector from a dependence on highly-valued property.

“The four actions were: the decision in December 2005 to abolish a wide range of property-based tax incentives; secondly, the refusal by the Government to abolish or dramatically reduce stamp duty; thirdly, the decision of the Financial Regulator in early 2007 to increase the capital requirements on banks for speculative property lending from 100 per cent to 150 per cent; and fourthly, the decision by Government to continue to allocate 1 per cent of GNP every year into the National Pensions Reserve Fund.

“These key actions taken prior to the crisis were significant and reduced the risks and vulnerabilities of the Irish economy, without which the crisis in the Irish economy would have been far worse.”