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Irish Banking Inquiry: Ex-PM Brian Cowen faces more questions Irish Banking Inquiry: Ex-PM Brian Cowen says impact of financial crisis could not have been avoided
(about 2 hours later)
Former Irish Prime Minister (Taoiseach) Brian Cowen will face further questions later at the inquiry into the causes of the Irish banking crash in 2008. Former Irish Prime Minister (Taoiseach) Brian Cowen has said the impact of the financial crisis in the Republic of Ireland could not have been avoided.
During his first appearance before the inquiry last week, he apologised for the "hardship and distress" caused to Irish people by austerity policies. Mr Cowen faced further questions on Wednesday at the inquiry into the causes of the Irish banking crash in 2008.
However, he said the policies were "necessary" during the banking crisis. He said he took responsibility for his role as leader of the country in the downturn.
Wednesday's hearing is expected to focus on the guarantee that made taxpayers liable for the banks' debts. But Mr Cowen said his policies while in power were "plausible"
He said the Irish government's decisions were stress-tested against threats, but there was a "clear misjudgment of the risks and potential impacts".
Mr Cowen also said his approach was "broadly shared" even by political opponents.
He said at the time the public was questioning if spending on improved services and other investments was happening quickly enough.
Mr Cowen said if his government had spent less during the boom, the country would not have suffered as severely from the late 2000s.
However, he said that would have also meant fewer jobs and lower growth before the crash, which "would have in turn reduced our ability to come out of recession as quickly as we have".
"One way or the other the impact of the financial crisis has made the serious adjustment in the public finances which could not have been avoided in any event," he said.
Mr Cowen said that a bank guarantee was a safer option than nationalising Anglo Irish Bank which he said would amount to an open-ended guarantee.
During his first appearance before the inquiry last week, Mr Cowen apologised for the "hardship and distress" caused to Irish people by austerity policies.
International bailoutInternational bailout
Mr Cowen is likely to be questioned about his decision to overrule his then finance minister by extending a blanket state guarantee on all deposits in Irish banks. However, he said the policies were "necessary" during the banking crisis.
The Republic of Ireland's banking sector had to be almost entirely nationalised when the bursting of a property price bubble coincided with a global financial downturn in 2008.The Republic of Ireland's banking sector had to be almost entirely nationalised when the bursting of a property price bubble coincided with a global financial downturn in 2008.
However, two years after the issuing the blanket guarantee to prevent a run on Irish banks, Mr Cowen's government was forced to concede the banks' debts were too big and had to seek an international bailout. However, two years after issuing the blanket guarantee to prevent a run on Irish banks, Mr Cowen's government was forced to concede the banks' debts were too big and had to seek an international bailout.
Mr Cowen stepped down as taoiseach eight weeks after requesting a financial rescue package from the International Monetary Fund (IMF) and the European Union (EU).Mr Cowen stepped down as taoiseach eight weeks after requesting a financial rescue package from the International Monetary Fund (IMF) and the European Union (EU).
The following month, his Fianna Fáil party suffered their worst ever defeat in a general election since the foundation of the state. The following month, his Fianna Fáil party suffered its worst ever defeat in a general election since the foundation of the state.
However, by December 2013, and after years of tough and unpopular austerity measures, the Republic of Ireland become the first eurozone nation to exit the bailout programme.However, by December 2013, and after years of tough and unpopular austerity measures, the Republic of Ireland become the first eurozone nation to exit the bailout programme.
The causes of the banking crisis are being investigated by an Irish parliamentary committee at Leinster House in Dublin.The causes of the banking crisis are being investigated by an Irish parliamentary committee at Leinster House in Dublin.