Collapse apology from ex-bank chief
Former Allied Irish Bank chairman Dermot Gleeson has apologised for his role in the cataclysmic economic crisis that broke Ireland.
Before a parliamentary inquiry into the banking collapse, Mr Gleeson said the country's largest bank had lent too much to developers, put too much faith in their wealth and relied on risk systems which were not up to the job.
While the "great recession" of 2008 did not start in Ireland, there was "no doubt" AIB took decisions that made it a lot worse for Irish citizens, he also admitted.
"I wish to express my sincere regret for my part in those events and renew the apology I made at the AIB annual general meeting in 2009," he said.
During that meeting, he said he regretted some of the lending decisions made by the bank. An angry pensioner, who said he had lost 20,000 euro in AIB shares, threw eggs at him.
Mr Gleeson told the Oireachtas Banking Inquiry that it was perfectly clear in retrospect that AIB's lending was "expansive" at a time of excessive risk-taking on the back of a construction and property fuelled boom.
But he claimed no lender could have stopped the bubble.
"Only authorities can do that," he said.
If AIB had stopped lending, their competitors would have happily stepped in to satisfy the demand, he told the hearing.
A former barrister and attorney general to John Bruton's Fine Gael-led government, Mr Gleeson said there was a national consensus that the country was growing at a sustainable level and the banks were well buffered against big shocks.
The key issue in the spectacular nosedive that followed was widespread predictions by leaders and economists of a "soft landing", he told TDs and senators.
"I think that is central to the errors," he said.
The former bank chief also claimed there were "some rational justifications" for the policies at the time, which turned out to be catastrophic.
These included demand for housing, international banking standards and lenders' reliance on risk forecasts.
Mr Gleeson was chairman of AIB between 2003 and 2009.
AIB, one of Ireland's two main banks dating back to 1825, was effectively nationalised in 2010 - a year after share prices plunged.
It was brought under a six-bank blanket guarantee by the then Fianna Fail-led government in September 2008, agreed at a late-night meeting at Government Buildings.
Mr Gleeson said AIB representatives were there that night, but were not directly part of the negotiations.
They had favoured Anglo Irish Bank and Irish Nationwide being allowed to collapse, and a four-bank guarantee introduced to cover the remaining lenders, he told the hearing.
But on the suggestion of the then Central Bank governor John Hurley, both AIB and Bank of Ireland spent the evening finding 10 billion euro to keep Anglo afloat until the following weekend.
Mr Gleeson said this was done to prevent what Mr Hurley feared could be a "fumble" or disorder if Anglo was "dealt with" mid-week while international stock markets were open.
The 10 billion euro week-long loan was guaranteed by the State, he added.
Mr Gleeson said he told his chief executive days later that AIB's reputation was being damaged by a perception that it wanted to be brought under a guarantee which "boosted and baked into the system" both Anglo and Irish Nationwide.
Anglo and Irish Nationwide were both eventually nationalised and are being wound up as part of the Irish Bank Resolution Corporation.
Mr Gleeson said in the run-up to the banking collapse, AIB was coming under constant pressure from customers and commentators to be more like Anglo, which he described as the then-darling of the European finance world.
The former rogue lender was held up as an "exemplar", he said.
AIB customers complained about the length of time and paperwork needed to secure borrowings compared to the likes of Anglo, he said.
Referring to an analogy by economist Alan Ahearne, Mr Gleeson suggested the financial regulator could have acted more like a football referee at the time.
"It's instructive that if you have a referee in a football match which is highly competitive, and Irish banking was enormously competitive at the time, and the referee doesn't blow the whistle much, the more aggressive team tends to prosper and other people can get injured," he said.
But Mr Gleeson said he fully accepted his responsibility for AIB's embarrassing slide into state ownership.
"I was the chairman of this (bank) and I bear responsibility, this is where the buck stopped," he said.
"I can tell you it is a salutary thing when you discover for the first time in your life, when you are in your 60s, that when you are doing your level best in a job that it is not sufficient to prevent very negative consequences ensuing."
Mr Gleeson said before taking the reins at AIB he had been a teacher, a barrister and a government adviser.
"The outcomes there were adequate, perhaps - no more than that," he said of his previous roles.
"But I did my level best in this job as well and the outcome was entirely unsatisfactory.
"That's a responsibility that I absolutely accept and I can never get away from it."
Also before the hearing, Donal Forde, former managing director of AIB, admitted he did not raise his own "influential" voice against the direction the bank was going in the lead up to the crash.
"My own failing in this respect is a matter of deep personal regret, and I'm very conscious of the implications of that misjudgment for very many people," he said.
Appointed to the board of directors in 2007, Mr Forde left the bank in 2009 after being switched from managing director to a role as director of strategy that he said never materialised.
The former bank boss said with the wisdom of hindsight, he can now see the serious misjudgments made by him and others in lending to customers without properly stress-testing their ability to repay.
"I simply did not see the scale of collapse that was to follow," he added.