Ireland's 440 billion euro bank guarantee was the most destructive own-goal in history, a banking expert has told an Oireachtas inquiry.
Professor William Black, of the University of Missouri-Kansas City, said the September 2008 decision was "insane" and the worst possible measure that could have been taken by the then Fianna Fail/Green government.
But the former director of the US Institute for Fraud Prevention said inexperienced politicians were bounced into the decision by banks that lied to them, and "utterly incapable" regulators.
But even with hopelessly false statements, the coalition government should "never ever" have bailed out subordinated debt - more risky loans which rank low in repayment claims - as part of the deal, he said.
The state guarantee had the effect of escalating a banking crisis into a full-blown fiscal crisis that sank an entire nation, he told the Oireachtas Banking Inquiry, which is investigating the lead-up to Ireland's crash.
Mr Black also warned that Ireland remained vulnerable to shortcomings which led to the crisis.
The academic and white collar crime expert said banks should not be allowed to choose their own auditors, and suggested a Government-appointed panel that would scrutinise the books of major lenders.
Mr Black said his own experience in the US showed that penalties for wrongdoing within the banking sector should include jail sentences for criminality.
The banking inquiry is expected to publish its findings later this year.