It really was rather frank, wasn’t it?
“As the credit crunch struck and Lehman Brothers collapsed. Pressure mounted from the United States government to underwrite the debts — Timothy Geithner, United States Secretary of the Treasury, feared that an Irish bank debt default, while not threatening of itself, could have spread contagion to the entire European system, to which American-backed “credit default swaps” were exposed to the tune of 120 billion euros.
This was later confirmed by State Department cables leaked through WikiLeaks. Alistair Darling, then Britain’s Chancellor, was severely critical of the guarantee, which put the British financial system at a disadvantage in the markets. Lenihan described the guarantee, which other countries soon copied, as “the cheapest bail-out in the world”, words which would haunt him…
If, in fact, the whole European system was at risk, critics suggested, then Lenihan could have extracted more generous terms than the crippling 5.8 per cent interest rate agreed with the IMF and EU, and which was considerably higher than the rates applied to Greece and Portugal. The Nobel Prize-winning economist Joseph Stiglitz said that the Irish government was “squandering” public money with its plan to bail out the banks.
Brian Lenihan Obituary (The Telegraph)