That was Patrick Neary, chief executive of the Financial Regulator, at the launch of his organisation's annual report on 24 July, answering a question about why the vast majority of debt securities vehicles put on credit watch that month by ratings agency Standard & Poor's were listed on the Irish Stock Exchange.

Less than a week later IKB, a midsized German bank based in Dusseldorf, had to accept 8bn in emergency credit from KfW, the German state development bank, to shore up Rhineland Funding, its Irish-listed off-balance sheet structured investment vehicle.

Rhineland couldn't meet its obligations to buyers of its commercial paper, which it sold to fund leveraged investments in property loans, including US subprime mortgages . . . notorious for months for high default rates.

Rhineland Funding and Rhinebridge, another Irishbased IKB investment conduit, together held about 15bn in securities . . . more than IKB's entire capital or 12bn in liquidity.

How did this happen on Ireland's watch?

"The regulators have played a critical role in all of this by basically allowing the system to be flooded with liquidity, " said Satyajit Das, an independent risk consultant and author of Traders, Guns and Money, an expose on financial markets. "They feel that to say anything at this point would be hazardous to the development [of Ireland] as a financial centre."

Das, who has more than 25 years of experience working in credit derivatives, said he believed financial institutions were using Ireland's tax efficiency and relatively light regulation in a kind of "regulatory arbitrage".

"They're using Ireland to exploit cracks between regulators, " he said. "Moving risk around isn't the same as transparency . . . it took ages for people to find out where they were exposed."

EU Commissioner for the Internal Market Charlie McCreevy . . . as Irish minister for finance a chief architect of the 2003 law that paved the way for much of the debt securities activity in Ireland . . . has pointed the finger at the credit rating agencies S&P, Moody's and Fitch, which determine how risky the investment vehicles are.

But it's not at all clear who will be left without a seat when the music stops. Official statements from the Financial Regulator repeat the mantra that as long as these structured investment vehicles meet the legal listing standards, they're kosher.

After all, the securities are bought by "sophisticated investors".

"The regulators have allowed credit rating agencies to become de facto regulators, " said Frank Partnoy, author of Infectious Greed and professor of law specialising in market regulation at the University of San Diego.

"Either the regulators should come up with judgments about fixed income securities on their own, or they should leave it to the marketplace. It is hypocrisy to enshrine a handful of rating agencies with regulatory authority and then claim buyers should beware."

According to Simon Adamson, a senior analyst with credit research firm Credit Sights, the ratings agencies have given a false impression to the market by handing out too many AAA ratings to vehicles that have turned out to be loaded with junk.

"The home regulators should take the lead, " he said.

"In general oversight has been light, lack of transparency has been a problem, especially IKB . . . it's not even clear to them what's in their portfolio."

For all Ireland's success in attracting this kind of business, there is a real danger that buyers just won't come back once the current crisis shakes out, said Adamson, unless the regulators can rebuild the market's confidence.

"The question for Ireland is whether it is worth the revenue from listing fees for the country as a whole to be tainted by the fact that so many questionable vehicles choose to list there, " said Partnoy.

"Do the Irish really want to be mentioned in the same sentence as Cayman? Maybe as a vacation destination, but certainly not from a financial perspective."