He’s sorry for how things turned out but it really wasn’t his fault. In a nutshell, that’s what Patrick Neary’s nine-hour appearance at the Oireachtas banking inquiry boiled down to yesterday.

It was the system of light- touch regulation that was being used across Europe at the time. It was the banks and their boards of directors who took the ruinous lending decisions. It was staff shortages in its banking supervision unit due to an inability to pay top wages. And it was the Central Bank for its failure to flag the stresses and strains that were building in the economy.

Neary never saw it as his role to be intrusive. Rather, he placed far too much trust in the banks.

Here's one example. Neary never saw it as his role to challenge Anglo Irish Bank or Irish Nationwide over their customer concentration.

The Nyberg report has detailed how the top 20 customers in Anglo at May 2008 had 50 per cent of the Irish loan book, which was €41.7 billion at the time. At INBS, 25 customers represented 51 per cent of the commercial loan book.

Sinn Féin's Pearse Doherty wanted to know if these startling statistics had not been of concern to him at the time.

Neary’s deadpan response was that the concentrations were within legal limits and if the concentrations were a systemic threat, then that was a matter of financial stability, which was the bailiwick of the Central Bank.

Central Bank functions

It’s worth remembering that the Central Bank’s functions were split in two by the government in 2003, with the Irish Financial Services Regulatory Authority given oversight of financial regulation and the Central Bank in charge of financial stability.

Having listened to the evidence of both Neary and John Hurley, former governor of the Central Bank, it is not clear where financial regulation ended and financial stability began. This was part of the problem.

Neary also told Doherty that the contract between a lender and a borrower was their business. “It is inconceivable that the regulator can determine who or who doesn’t get a credit from a bank as a customer of that bank,” he said.

In September 2007, Anglo's then chief executive David Drumm asked to meet Neary.

He asked if Neary knew anything about contracts for difference (CFDs). These had been used by businessman Seán Quinn to build a large stake in Anglo, and Drumm informed Neary that rumours to that effect were going around.

Roll on to January 2008 and Quinn turned up at Neary’s door unannounced seeking a meeting. The phrase that sticks in Neary’s mind is of Quinn telling him that he had small CFD positions and was “now long in financials”.

Rumours

Remarkably, Neary never asked him what the size of his CFD position was or which bank he had taken a stake in, even though he was aware of the rumours around Anglo.

“It was his own business,” was Neary’s response.

Neary’s evidence also makes clear that he was only on the sidelines on the night of the guarantee. His main input was to argue that a blanket guarantee would offer more certainty to the markets.

What about his assertion to Prime Time on October 2nd, 2008, that the Irish banks were in good shape? "In hindsight, that was probably optimistic," he said.

Within a couple of months the State had spent €10 billion on its first wave of recapitalisation.

Neary had joined the Central Bank in 1971, working his way up the ladder before being appointed as head of financial regulation as part of an international competition that produced a shortlist of 15 candidates.

His evidence yesterday painted the picture of a nice man who was simply overpromoted. Neary was too meek to be the financial sector’s watchdog.