There were many warning signs in the 12 months prior to the bank guarantee that should have led to an investigation of the banks, and Anglo Irish Bank in particular. The statement that there was no alternative to a bank guarantee on 29 September 2008 may be true, but only because the longer the delay before acting, the fewer options there are.
It seems Irish officialdom's inability to manage this crisis, and the consistent chain of mixed messages and "revised information", have embedded themselves into the collective psyche of international markets. In other words, they don't believe our spokesmen any more and that is one reason Irish bond yields are so high.
The former head of the NTMA, Michael Somers, has revealed that in 2007 the NTMA stopped placing billions on deposit with Anglo because of its concerns about the bank. The head of the NTMA reports to the finance minister. The Department of Finance could have arranged for Anglo to be investigated in 2007 to determine if the bank was as dodgy as the NTMA believed it to be.
On St Patrick's Day in 2008 Anglo's share price dropped dramatically and investors were selling the shares short. This could have triggered an investigation and resulted in discussions with our eurozone partners.
For many months, perhaps even years, Anglo was paying a very large premium to secure deposits and was facing serious liquidity difficulties. This was another warning sign of liquidity problems missed by officialdom.
The collapse of Lehman Brothers in September 2008 was a major shock and should have jolted the powers-that-be into re-examining their assessment of the fundamental stability of the Irish financial system, particularly Anglo. They should have engaged with our eurozone partners to consider the risks to the euro from this collapse and examined the funding requirements of all Irish banks to plan for any potential shortfall.
Banks worldwide were experiencing liquidity problems. No one wanted to lend to anyone else. There was a 24/7 state of crisis. Three days after Lehman's collapse, Irish depositors were so scared that Joe Duffy was reporting the transfer of bank deposits to An Post. Instead of investigating the basic liquidity issue, a bank deposit guarantee of up to €100,000 was introduced.
Finance minister Brian Lenihan disclosed that he held a war cabinet meeting that day with senior figures and "we realised we had a battle on our hands", but it seems the battle had begun a long time before and they were playing catch-up.
In the midst of this so-called battle no one thought it necessary to forensically investigate Anglo's projected cash flows. Who was in charge of the "war cabinet"? Was it the Taoiseach, the minister for finance, a secretary general or someone else? Who had the final word of advice each day in the Taoiseach and/or minister's ear?
On 27 September, a Saturday, Brian Lenihan took a break from the battle. He went to a race meeting in Kilkenny and turned off his phone. The chairman of the ECB phoned him and left a message saying, "You must save your banks at all costs". This message was not received until the following day. The government decided to guarantee all known and unknown liabilities of Irish banks less than 48 hours later.
On the Monday, Brian Lenihan went to the Irish Central Bank to "hear how serious things were". A full weekend, in the middle of a battle, had been lost although officials were probably available to engage with interested parties, here and in Europe, in the minister's absence, if required. The battle finally arrived at Government Buildings in the form of a meeting with the chairmen and CEOs of the banks on Monday night, after their meeting that day with Anglo's chairman and CEO, who went to them looking for help. Time had run out.
The fact that Irish officialdom did not heed the warning signs since 2007 regarding the banks meant that there would be less than 12 hours to consider what should be done. The only option available would bring Ireland to the verge of bankruptcy, followed by two years of fire-fighting and, now, discussions on a possible rescue package and temporary loss of the sovereignty Irish people dreamed of for 700 years.
An investigation of Anglo at any stage in the previous 12 months would have resulted in examinership. This would have given the government 100 days to establish the extent of the problem and decide, in an urgent but unrushed fashion, in consultation with our eurozone partners and the ECB, what to do.
We are being told that Irish "officials" are only now talking to our eurozone colleagues about a rescue package and the steps needed to save the euro. The inference is that our government was alone and isolated for the last three years of this crisis, that it had no choice but to bring in one of the biggest bank guarantees in the history of the world to protect the euro and the west's financial systems without any help or advice from the European Central Bank, the European Commission, the governments of our eurozone partners and the UK, our nearest trading partner. The British chancellor famously heard about the Irish bank guarantee on the news. The French government was told about it by phone on the morning it was announced.
Why did our finance minister decide to "go it alone" and tell no one in the ECB or the EU Commission about our banking problems? We should quickly establish what happened so the lessons learned can help other countries, and banks, avoid our mistakes.
We are a member of the EU and a member of a single currency. This was never a purely Irish problem and should never have been dealt with for so long behind closed doors. We will be a better and more democratically sound country when we emerge from this with our arrogant wings clipped.
Mike Flynn is a chartered accountant, a former director of the European Bank for Reconstruction and Development and a former director of ICC Bank