Brian Cowen: no intention to mislead the Irish public

Former Taoiseach Brian Cowen has said there was no intention to mislead the Irish public about the Government's talks with the EU and IMF on a bailout programme in November 2010, but accepts that it was a "miscalculation" on his part not to reveal this sooner.

"Once the IMF component of the delegation was coming to Dublin . . . it immediately created a view it (the bailout) was a fait accompli," Mr Cowen told the Oireachtas banking inquiry (LIVE BLOG here), on Wednesday afternoon.

EU personnel coming to town would not have had the same impact, he said. “There’s no benefit in a government misleading its own people. We weren’t doing that. We were simply trying to get as full a picture as we could before formally applying for a bailout.”

He said the government was simply trying to use as much leverage as it could “to get as good a deal as we could get” before formally applying for a bailout.

Mr Cowen said the former finance minister Brian Lenihan had come under pressure at an meeting of EU finance ministers in mid November for Ireland to accept a bailout. But he informed the other countries that he had no mandate to do this and that it was a decision for the Government.

In the end, Central Bank of Ireland governor Patrick Honohan went on RTÉ’s Morning Ireland radio programme to say that Ireland would probably have to seek a bailout programme.

This followed earlier Government denials of reports in international media that Ireland was in talks about a bailout.

In his evidence to the committee, the governor said his interview on Morning Ireland on November 18th, 2010, was motivated by the “sense of growing panic in the financial sector that the Irish situation was getting out of control”.

Mr Cowen said he was “satisfied” that it didn’t have a “detrimental impact” on the negotiations with the Troika, but it did have a “detrimental impact politically” for the government.

Burning bondholders once the original bank guarantee was due to expire in September 2010 was “not something that the NTMA was in favour of” as Ireland was still raising funds from capital markets, Mr Cowen said.

“Once we were out there borrowing funds on bond markets from a limited pool of investors the question of being allowed to burn senior bondholders was not something that the NTMA [National Treasury Management Agency] would be in favour of in terms of getting funds at the right price,” he said. “My belief is that the NTMA would not have been in favour of that.”

Eoghan Murphy of Fine Gael noted that the guarantee of some €19 billion of unsecured senior bonds were due to expire in September 2010, with €2.4 billion repaid between this point in time and the bailout negotiations two months later.

Mr Cowen said the European Central Bank was also not in “favour” of burning bondholders in September 2010 although it hadn’t made its position explicit by that stage.