McCreevy blasts EU financial regulators

European Commissioner Charlie McCreevy has lashed banking and financial regulators, saying the system had 'aided and abetted' the creation of a super-bubble.

Speaking to hedge fund managers in Brussels, Mr McCreevy said the regulatory and supervisory systems in Europe and the US had tolerated relaxed lending practices and the accumulation of unsustainable debt by households, individuals and companies.

Read Mr McCreevy's speech in full

While he said regulation was not the root cause of the problem, it did allow the emergence of business models based on what he called 'flimsy and highly leveraged foundations'.

The Internal Market and Services Commissioner also said the regulatory regime exacerbated the depth of the crisis because it had the effect of putting more money into an already booming economy.

He said Europe will not regulate its way out of the crisis.

However, Mr McCreevy said there will have to be additional regulation, and said that regulation of hedge funds and private equity was inevitable.

He also said the commission will soon be proposing regulations on executive pay in the banking and financial industries to more closely align executive pay with the long term income of such companies, rather than rewarding short term gain.

Ireland faces severe challenges: Trichet

President of the European Central Bank Jean Claude Trichet has said these are challenging times for Ireland, Europe and the global economy.

RTÉ Economics Editor George Lee speaks to Jean Claude Trichet

In a speech to the Institute of International and European Affairs, Mr Trichet said that the Government is 'acting resolutely' to address the economic situation.

He said the Irish economy has been undergoing a necessary rebalancing in the composition of its growth, which is intensifying the challenges it faces.

He said that in particular the construction and banking sectors need to adjust.

He also said it is essential that fiscal policy convincingly reduces future public deficits.

Mr Trichet believes Ireland will be well placed to benefit greatly from the eventual recovery in the future and to compete effectively in the global economy in the future.

Lenihan stresses importance of Anglo Irish

Minister for Finance Brian Lenihan has given a briefing on the unfolding financial crisis to the Oireachtas Committee on Finance and Public Service.

Mr Lenihan discussed the measures that might be needed over the coming months to shore up the Irish financial system.

He signalled a possible increase in income tax rates saying the overall tax burden will have to rise.

The minister also stressed the viability of Anglo Irish Bank was of systemic importance to Ireland.

He added that the publication last week of Anglo Irish's accounts brought an end to what he called a regrettable chapter in the bank's history.

Minister Lenihan also said the Chairman of Anglo Irish Bank had called to him before 30 September last year to ask for support for a consolidation of Anglo Irish and Irish Nationwide.

The minister had earlier defended the appointment of Richie Boucher as the new Chief Executive of Bank of Ireland.