The blanket bank guarantee was the best option available to the government in September 2008, former taoiseach Brian Cowen has said.
Mr Cowen told the Oireachtas banking inquiry no decision was risk-free but the guarantee was "safer" than nationalisation of Anglo Irish Bank.
He insisted he did not overrule former minister for finance Brian Lenihan on the night in question.
Mr Cowen said he held a private meeting with Mr Lenihan and the two men agreed on the method chosen.
He said: “We were grappling with a situation here which was very serious.
“We came, ultimately, to a conclusion as to what we felt, on balance, with different degrees of enthusiasm as well – no one was enthusiastic, obviously – but different degrees of conviction what was going to be the best thing to do.”
Mr Cowen said nationalisation of Anglo carried a weight of risk he was not prepared to take. He said it could have potentially brought on more nationalisations and may not have been the confidence boost the sector needed.
Best solution
He insisted it was not a question of overruling his minister for finance, and the two men were trying to find the best solution.
He said: “I’m sure he respected my position as well as I respected his, but, you know, at the end of the day, I had to chair the meeting, I had to pull it together based on all of these views that were being held.
“It wasn’t an atmosphere where I was overruling people.
“We had a long discussion about it. It wasn’t in any way acrimonious. Why would it be? We were both on the same side trying to do the best we could in a difficult situation.”
Mr Cowen told the inquiry he did not have an agreed position when he entered the discussions. He said he spoke to only one person outside the room on the night the decision was made: former Central Bank director Alan Gray.
Pearse Doherty of Sinn Féin asked if Mr Cowen was told that Anglo's then chairman, Seán FitzPatrick, and chief executive, David Drumm, had visited Mr Gray earlier that day.
Mr Cowen said he was not aware of that when he spoke to Mr Gray.
Mr Cowen told the committee that the government could have walked away on the night in question. “We could have walked away from our responsibilities and abdicated our responsibilities saying: ‘I’m not big enough, we can’t make this decision. It’s too big.’
“With all the risks and all the pros and cons, you’ll find 20 arguments why you wouldn’t do this and 20 arguments why you won’t do that.
“And if you lose the sight of the basic thing, that if you don’t have a banking system tomorrow or next week, there’s hundreds of thousands of people who are waiting for their wages who mightn’t get them and all the rest of it.”
No documentation
He said he was sorry there was no documentation of the night the guarantee was agreed. “I am sorry there is not a full and accurate note of the night. It would be for the protection of all of us.”
The former Fianna Fáil leader also expressed regret for not holding a cabinet meeting on September 29th 2008.
Mr Cowen said there had been one on the Sunday evening, September 28th, and calling one the following morning was a judgment call.
He said: “I’m sorry to colleagues if any of them feel that we should have had that meeting.”
