Rehn will ‘consider seriously’ any banking inquiry invitation

Former European commissioner Olli Rehn has said he would "consider seriously" appearing before the forthcoming banking inquiry if he is asked to do so.

Mr Rehn, who stepped down as commissioner for economic and monetary affairs in July, said it was easy to be critical of how the Irish financial crisis was handled in hindsight, but the decisions made by the European Central Bank and the European Commission were taken when the Irish and euro zone economies were "in a freefall".

Speaking on the Marian Finucane Show on RTÉ Radio, Mr Rehn said that while he was not very familiar with the proposed banking inquiry, "it is both reasonable and useful that in Ireland a profound analysis of the crisis will be done".

The final terms of reference for the banking inquiry, signed off by an 11-member Oireachtas committee earlier this week, are expected to be debated in the Dáil and Seanad next month.

The inquiry will cover the period from 1992 to 2013, and examine the circumstances leading up to the bank guarantee and its aftermath. It will be entitled to call politicians, developers, bankers, auditors and civil servants, as well as officials from the ECB.

Former ECB president Jean-Claude Trichet indicated in May however that he had no intention of attending the inquiry, saying all decisions made by the ECB were taken collectively by members, and “the responsibility of explaining decisions are in the hands of the governments”.

Asked whether he thought Mr Trichet should appear before the inquiry, Mr Rehn said “there are often understandable reasons why confidentiality has to be respected”.

“I would not want it to be focused only on one person… there are other more systemic and structural reasons behind [the banking crisis],” he added.

Earlier this week, the current ECB president Mario Draghi said the bank's governing council will discuss the question of Mr Trichet's appearance before the banking inquiry in the coming months.

Minister for Finance Michael Noonan has said he will not personally intervene to ask Mr Trichet to appear, but that the inquiry should "hear from everybody who's directly involved".

When asked about an alleged phone call made by Mr Trichet to the then minister for finance Brian Lenihan in November 2010, telling him that the bondholders could not be burned, Mr Rehn said he was "not able to comment".

“I am not aware of the discussions between the ECB and the Irish Government, which are quite crucial in this context,” he said.

“Before the crisis the banking rules of shareholder responsibility were not so clearly defined, which partly led to the situation where the Irish rescue operation had to be done. However at the end of the day I would not completely take Ireland out of the responsibility of what happened during the banking crisis… the Irish banks also lended rather recklessly during the crisis period.”

Asked if he thought Mr Trichet had put pressure on Mr Lenihan not to burn the bondholders, Mr Rehn said: “Yes I think there was political pressure.”

“I have been in public office for over 30 years, and every day there is political pressure from somewhere. It is part and parcel of being in public service that you are under pressure. It is also obvious in the case where in any country that is facing such a dire economic situation that it has to enter an economic programme.”

Mr Rehn said he had discussed the Irish rescue operation with Mr Trichet, but “we had a division of labour”, whereby the ECB led negotiations in the financial sector, while the European Commission took more responsibility for economic reforms and public finances.

Mr Rehn, now a Finnish MP and vice president of the European Parliament, said he intends to write his own assessment of the financial crisis in Ireland.

“I want to contribute to a better understanding of the crisis and its reasons, so that we can do better next time if faced with [A SIMILAR]crisis,” he said.

Speaking during a discussion about a new book about Mr Lenihan on the Marian Finucane Show, Mr Rehn said the former minister for finance had been a “great colleague”, who “was a very committed to the cause of Ireland and trying to save the Irish economy”.