Former Financial Regulator Patrick Neary: joined the Central Bank in 1971 after spending a year studying Greek and Latin in UCD. He had no economic background

THE government considered raiding cash in the Social Insurance Fund – which pays everything from the state pension to maternity benefit – in September 2008 to build a €18bn "war chest" to provide loans to the banking system.

A note of a meeting between officials from the Department of Finance, the Central Bank and the National Treasury Management Agency said there was a continuing outflow of cash from the main banks and that the government would have to consider putting a special liquidity system in place to support them.

The NTMA said there was "no appetite" for the state to raise money by issuing bonds and the meeting then considered alternative sources of cash available.

About €3.3bn was available in the Social Insurance Fund, into which all workers make contributions. The fund has since been drained because of the surge in dole payments.

To build the war chest the state would put up €8bn of cash and sell about €9bn of bonds held by the Central Bank. It would get a further €4bn from taking cash and bonds held in the National Pension Reserve Fund, which was set up to pay the pensions of future retirees.

According to separate documents, published by the Public Accounts Committee on Friday, there were concerns in the middle of September that Irish Nationwide Building Society would run out of money within 11 days, while the department's financial advisers, the US investment bank Merrill Lynch, warned that Anglo Irish Bank would run out of cash on 30 September – the day the blanket deposit and
debt guarantee was announ­ced.

The documents also reveal that Goldman Sachs, which was appointed to consider the health of Irish Nationwide, believed there was "real value" in its loan book.

At a meeting with officials from the Department of Finance, bankers from Goldman Sachs, including well known Irish banker Basil Geoghegan, said Irish Nationwide's loan book was "well diversified" and its auditors told them the building society's was no worse than "anywhere else".

Goldman's assessment was that Nationwide would lose a few hundred million euros. The government has since taken control of the institution and been forced to prop the society up with €2.7bn of taxpayers' money to cover losses on property loans.

According to the note of the Goldman Sachs meeting, it was considered "essential" to "retain knowledge of management".

The building society's veteran managing director Michael Fingleton left in 2009 and hasn't repaid a €1m bonus awarded to him in 2008.