A Commission of inquiry, rather than an investigation by an Oireachtas committee, is emerging as the government's favoured means of investigating the cause of the banking crisis.
Finance minister Brian Lenihan is due to bring a "framework" to cabinet this week on the best way to proceed with an inquiry and no final decision has been taken.
However, it is understood there is a belief in government that it would be extremely difficult for an Oireachtas committee to conduct the inquiry for constitutional reasons and because it would risk undermining ongoing investigations by the gardaí and the Office of the Director of Corporate Enforcement.
The idea of a commission of inquiry, along the lines of the recent Judge Murphy-led inquiry into the Dublin archdiocese, is being strongly considered.
The commission could include various experts in banking, regulation and law. Such an inquiry would have full powers of compellability. Its work would be held in camera, to get around the issue of garda and corporate enforcer investigations, but its final report and conclusions would be published.
Before any commission of inquiry, it is likely that an expert, or several experts, would be asked by the government to conduct an initial investigation of documents, practices, institutional issues and regulation both here and abroad to help set out the parameters for the subsequent inquiry. This would take only a matter of months, sources said.
This would be in line with what happened with the Dirt inquiry a decade ago, when there was a preliminary investigation by the Comptroller and Auditor General, and with what the Labour Party was advocating last week.
But Labour's argument that the subsequent investigation should be carried out by an Oireachtas committee seems set to be rejected by the government.
Labour last week published a bill that it said would give specific powers to the Oireachtas to conduct full inquiries by committee. Labour's justice spokesman, Pat Rabbitte, said it was not true that parliamentary inquiries of this nature had been rendered obsolete by the Supreme Court judgement on the Abbeylara inquiry into the shooting dead of John Carthy by gardaí, but the view in government is that there are considerable constitutional difficulties with this type of inquiry.
Asked to comment on a banking inquiry, a government spokesman said the taoiseach had pointed out that there would be merit in determining what went wrong in the banks. But he said it would be "a very serious mistake to risk doing anything that would jeopardise the steps taken in the last 16 months to restore stability or to assume that the task of implementing the necessary measures for recovery is complete".
The Taoiseach agreed with the governor of the Central Bank that the key question was how best such an inquiry could be conducted "and in particular Professor Honohan's assertion that a 'witch-hunt is no good to anybody. What we want to do is go behind the glib statements that are made about why things happened in the way they did and really try to dig and put the finger on any processes, any structures, in our whole system that really contributed to this [banking crisis]".