Government armed with €20bn before crisis meeting – Cardiff

The Government put together a "fighting fund" of about €20 billion in advance of the meeting on September 29th, 2008, that led to a blanket bank guarantee being introduced, former secretary general of the Department of Finance Kevin Cardiff has revealed.

In his book on the banking crash, Recap: Inside Ireland’s Financial Crisis, Mr Cardiff said this was to ensure that the government had “many billions of euro ready at very short notice” to deal with the unfolding crisis.

He said Brian Cowen was "calm and in charge" on the night and restated his view that the then taoiseach raised the issue of a broad pre-emptive guarantee early in the discussion.

“It seemed to me that he had a preference for this approach going into the meeting, or at least that it was the baseline approach against which every other option would be considered,” said Mr Cardiff said.

This was also his evidence to the Oireachtas banking inquiry last year, although Mr Cowen told the committee that he had not made up his mind as the meeting started.

Big decisions

Mr Cardiff said he was “somewhat relieved” that big decisions were going to be made and there would be “no more wait-and-see”.

“I was confident that my team, with the attorney general’s staff of lawyers and parliamentary drafters, could deliver any legislation required very quickly, as we already had prepared draft legislation which could allow for guarantees,” he said.

Central Bank governor John Hurley noted that the ECB president Jean-Claude Trichet had stressed that it was essential that there be no bank failures in Europe.

“More worryingly, Trichet had also confirmed that there was no European initiative in the works which might ameliorate the situation.”

The financial regulator, Patrick Neary, told the meeting that the banks "were solvent, if not without difficulties".

Mr Cardiff said representatives from AIB and Bank of Ireland said their difficulties were so acute they might run out of funds in a matter of weeks.

According to Mr Cardiff, the banks “explicitly sought a very broad guarantee” and provided “suggested wording”.