The warnings from the Irish authorities to the risks of a property bubble were 'modest and insufficient', according to the Nyberg report.
The report, authored by Finnish banking expert Peter Nyberg, says the main reason for the crisis 'was the unhindered expansion of the property bubble' financed by the banks using wholesale market funding.
Even though the speed and severity of the crisis was made worse by worldwide economic events, the Nyberg Report says the problems causing the crisis, as well as the scale of it, were the result of domestic Irish decisions and actions.
'The extent to which large parts of Irish society were willing to let the good times roll on until the very last minute may have been exceptional.'
The risks linked to the bubble 'were undetected or seriously misjudged' by the regulatory authorities and the Department of Finance.
It stressed that the banking crisis was not caused by international developments.
'There simply was nobody abroad forcing Irish households, investors, banks and authorities to accept such risks.'
The 'relaxed attitude of the authorities was therefore the result of either a failure to understand the data or not being able to evaluate and analyse the implications correctly'.
The development of a 'national speculative mania' in Ireland during the property boom is highlighted in the report.
Anglo Irish Bank, because of its strong growth, came to be seen as a role model for other Irish banks, leading to 'a general lowering of credit standards'.
According to the findings, banks appeared to have behaved in a 'herding' fashion, while there was a widespread lack of critical discussion within many banks and authorities.
Mr Nyberg says that while procedures and process existed on paper at Anglo, they were not followed in practice.
At Irish Nationwide, he says some essential, independent functions either did not effectively exist or were under-resourced.
'It appears that, at least in the latter years, only a handful of management was aware of all activities of the bank.'
Govt 'actively supported' property market
The Central Bank and Financial Regulator took note of risky bank behaviour, but did not seem to think it worrying enough to take major policy measures to restrain the banks.
The report says a 'very limited' number of individuals argued for stronger measures but failed to convince their superiors.
The Government actively supported the property market over a long period against the 'apparently weak but clear' opposition of the Department of Finance.
On the bank guarantee of September 2008, the report says that if accurate information on the state of the banks had been available at the time, it is 'quite likely' that a more limited guarantee, combined with a State takeover of at least one bank might have been considered more seriously.
Decisions at the time were made on the wrong assumption that all the banks were, and would remain, solvent.
The banking guarantee represented a considerable risk to the country, and it could have been useful to consider other ways of keeping the banks going for a few days.
But the report adds that, given the mood of financial markets at the time, the risk of destabilising the situation would have been 'substantial'.
Referendum to be held on Oireachtas committee powers
The Government is to hold a referendum later this year to enable Oireachtas Committees compel the attendance of witnesses to hearings.
The development follows the publication of the Nyberg Report.
At a press conference Minister for Finance Michael Noonan said the previous Government had failed to deal with the Abbeylara court decision which had limited the powers of investigation of committees.
Mr Noonan said the Government would be taking action to strengthen its oversight of the banking sector.
Financial institutions will be asked to provide Board Renewal Plans to ensure that members have the appropriate skills and competences.
Board members appointed before the 2008 guarantee would step down first as part of a planned rotation.
Each covered institution would also have to provide a management renewal plan.
Finally, a stand alone unit would be established which would be accountable to the Minister for Finance to manage the Government's holdings in the financial sector and to oversee the process of renewal.
Initially this would work within the department but in due course would become more independent while still reporting to the minister.
Report 'a catalogue of complete failure'
Former Minister for Finance and current Fianna Fáil spokesman Brian Lenihan said he welcomed the report.
Mr Lenihan said: 'The report is a direct challenge to what it shows to have been a wide consensus through that period which looked at the property market primarily in terms of the need for more houses and expectations of rising prices.
'We welcome the fact that the relevant agencies have received the report and have been asked to examine possible legal action concerning failures of corporate governance.'
Sinn Féin Finance Spokesperson Pearse Doherty said the report was a 'catalogue of complete failure'.
'This report clearly finds that the Government policy added to collapse in the banking sector.
'Warnings from others who criticised their policies weren’t heeded.'
Independent TD Shane Ross said the report had spread the blame very widely, but it showed that there was a very 'clubby' atmosphere among banks, regulators and others in Irish society.