Ireland '˜railroaded' into saving collapsed banks

After 18 months of work and 413 hours of hearings, the cross party report said there had been an almost universal acceptance until 2008 that the property and lending bubble would end with a “soft landing”.

The Oireachtas banking inquiry said this “fatally-flawed theory” was never substantially tested or challenged and was a key failing for government, the Central Bank and the Department of Finance.

It went on to describe the infamous September 2008 “night of the guarantee”, when the six main banks made a deal with the Government to secure h440bn worth of deposits as a “thing of myth”.

The inquiry found the idea was not born on one night but had been considered as early as January of that year and the “decision-makers” on the night were basing their plan on inaccurate information about the health of the banks.

The lack of an independent, in-depth, deep-dive investigation of the state of the banks before that night was also criticised.

The committee, which has published a majority report after Sinn Fein’s Pearse Doherty and Socialist Party TD Joe Higgins refused to give their support to the findings and recommendations, said the 2010 multibillion international bailout loan package was inevitable.

“The ECB nevertheless put the government under undue pressure to enter a programme, but also insisted that there would be no burden sharing with bondholders,” the team said.

“These were all actions for which the Irish people ultimately paid and are still paying a heavy price.”

Ciaran Lynch, chairman of the inquiry, defended the benefit of the h6.5m inquiry, which was never intended to point the finger of blame at individuals.

He said the idea that Ireland was bounced into a bailout was not true - repeating the finding that it was inevitable. He also said the idea of the bank guarantee being tabled in one night had now been debunked.

“There is no certain formula to avoid another crisis but constant vigilance and early preventative action is critical,” he said.