Former European Central Bank President Jean Claude-Trichet was the only person stopping the current Government burning the bondholders in Anglo Irish Bank and Irish Nationwide, the banking inquiry has heard.

Former Secretary General of the Department of Finance John Moran said discussions were ongoing with the ECB up until the minute Minister for Finance Michael Noonan announced the restructuring of the banks in the Dáil in 2011.

Mr Moran said he was not on the phone call but said Mr Trichet had made it “very clear” he would not have been happy with burden sharing.

He said: “I was not on the phone call. I can certainly tell you we had a Minister and a Government who were very anxious to burden share with those bonds and the only person who was stopping them was on the other end of the phone call.”

Mr Moran was answering questions from Fianna Fáil TD Michael McGrath who asked whether Mr Trichet had threatened to withdraw funding if Ireland pursued that route.

Media coverage

Mr Moran also criticised politicians for focusing on media coverage rather than the future of the economy.

Mr Moran, who joined the department in 2011 and left in 2014, said the crisis had been portrayed as a TV show but he said the reality was very different.

“Some people like watching thriller TV programmes or movies, accustomed to plots with high-suspense and goodies or baddies. They might wish for the drama of Ireland’s economic collapse to be couched in terms of irresponsible overpaid bankers, reckless developers, the night of the bank guarantee, and the burning of these faceless bondholders. It makes good TV as they say.

“A simplistic rhetoric has therefore been entertained that if we had not had a collapse of Lehman Brothers and the Irish banks, and had burned the bondholders, we would have had no issues. True, our property price collapse led to awful widespread destruction of personal wealth and unemployment.

“But the sad reality is that an acute lack of fiscal capacity at governmental level removed flexibility in easing the impact of those problems. The fiscal rectitude we are experiencing since, was a necessary result of the terrible and perilous structure of Ireland’s fiscal profit and loss (or if you like taxes and spending).”

Mr Moran said the story had been portrayed as €64 billion being given to our banks but he said more than half of that had been paid back.

Fixated

He used his opening statement to criticise the culture in the political establishment and said most were fixated on getting on the news rather than the future of the economy.

He said: “It was surprising too to me how little proactive debate about strategic longer term choices for Ireland was taking place even in private within the corridors of power in ways that involved the full broader leadership team of all of the government departments.

“Should our political system encourage this more or permit the time to be crowded out by an agenda dictated on short termism?

“Do we really have the right structures as a state to encourage wide ranging cross-disciplinary debate about future spending priorities or infrastructural needs or the structures of our economy? ”

Mr Moran said politicians should take time to understand and debate the issues even if the “news at 6pm will be less enthusiastic about covering them”.

The former official said civil servants are encouraged not to speak out in the past but he was lucky to have a minister who supported him.

He said the media intrusion into his person life has been “unacceptable” and said the intrusion is caused by his attempt “to stimulate discussion on key choices facing our urban planners”.

Mr Moran said he had been “subjected to inaccurate public criticism by some even then current politicians for stating facts in a neutral but truthful way about repossession statistics in the country”.

He added: “Unless the system robustly defends (not attack) civil servants acting in good faith, is it fair to expect them to be more vocal and point out the alternatives, however unpopular, to the political choices or to protest loudly when perhaps a wrong decision is being contemplated?”

Same mistakes

Mr Moran said there is still some way to go and said there is a risk of making the same mistakes again.

He said there is a need to be vigilant about offering property-based tax reliefs and said there is an “element of going back to where we are”.

The former secretary general said there was also a risk of being hit with fines for not adhering to the troika programme.

Mr Moran was asked about his relationship with former Irish Bank Resolution Corporation chief executive Mike Aynsley.

He said he was reluctant to answer questions on the institution because of the Commission of Investigation that has now been established.

But he said he and the department had a “different mission” for the bank which led to discussions.