Ex-Irish PM Cowen defends policies in banking inquiry blame game

  • World
  • Thursday, 02 Jul 2015

DUBLIN (Reuters) - Former Prime Minister Brian Cowen robustly defended policies he put in place ahead of Ireland's financial crisis, accepting responsibility for the consequences but following others in spreading blame at a parliamentary inquiry.

Irish lawmakers are questioning former bank executives, government ministers and officials as part of an inquiry into the country's banking crisis, seven years after it took hold and led to the most expensive state bailout in the euro zone.

"As head of the government I accept full and complete responsibility for my role in and our response to that crisis," Cowan told the hearing.

He was addressing the issue in detail for the first time since he quit as Fianna Fail leader before its record 2011 election loss following Ireland's entry into an international bailout, and went on to dual with former opponents in the most animated hearing yet.

"Let's remember, guys, the country was going pretty well. The policy that we had at the time was plausible and backed up by international peer assessment," Cowen said as MPs focussed on his time as finance minister from 2004 to 2008 when Ireland's "Celtic Tiger" economy began to go from boom to bust.

"Now that we know where we are now, of course I would have had a different policy. There is no government in the democratic world which was budgeting at the time on the basis that we were going to have the biggest international crisis since 1926."

Cowen said he was sorry for the hardship and distress faced by many people as a result of the policies his government had to put in place after a property bubble burst just as he took over as Prime Minister, launching twin banking and fiscal crises.

But like the bank executives who criticised poor regulation and regulators who felt restrained by government policies, Cowen laid blame with bankers, Ireland's Central Bank and particularly the opposition parties who now share power.

"There were constant demands for more spending," Cowen said of the political debate at the time, adding that suddenly halting years of increased spending ahead of the crisis after a decade of economic growth would also have been a mistake.

Cowen accepted that the property bubble grew under his watch but that there would have been a gradual easing and softer landing for the economy without an unprecedented global financial collapse.

In one prickly exchange with a committee member on whether Cowen and his party were too close to bankers and property developers, chairman Ciaran Lynch had to step in and warn that the inquiry could not turn into a heated parliamentary chamber.

"You are setting me up as some sort of guy who is promoting cowboy speculators. I am not. I don't travel in those circles," Cowen said.

(Reporting by Padraic Halpin; Editing by Toby Chopra)

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