Labour TD Ciaran Lynch who has been nominated by the Government to chair the Oireachtas Banking Inquiry, has said it is important that the inquiry's terms of reference are very tight.
He told RTÉ's Six One, it would be a thorough investigation into the decisions which led to the crisis.
Earlier, Taoiseach Enda Kenny said he hopes that the banking inquiry will be in operation by the latter part of the year.
He said the scale of the preparatory work will be quite extensive.
Mr Kenny also said it was important to find out what happened.
He was also critical of what he described as the catastrophic consequences of light-touch regulation during the Fianna Fáil period in government.
The decision on behalf of Labour and Fine Gael was made after this morning's Cabinet meeting.
It is proposed that the banking inquiry will be carried out under new legislation and will be conducted by a new committee.
The Government said it hopes that a motion establishing the inquiry will be before the Oireachtas next Tuesday.
Deputy Lynch said he believes he is regarded as fair, confident and someone who can get the job done.
He also said it is important that the inquiry is very specific in what it is going to inquire into and that it is very clear in what time frame its work will be carried out.
Earlier, Minister for Public Expenditure and Reform Brendan Howlin said the inquiry's terms of reference would have to be agreed between the parties.
Speaking on RTÉ's News at One, Mr Howlin said the size of the committee was still to be determined.
However, he said it would not be overly large as there would be a huge amount of preparatory work and all members would need to hear all the evidence.
Mr Howlin said it was likely to contain seven or nine people and have powers of compellability similar to those of the High Court.
The minister said he was strongly of the view that some of the people who were involved in the economic crash would be anxious to give their version of events.
He said the law of the land would ensure that there would be proper procedures preventing the inquiry becoming a political show trial.
Mr Howlin said there would be a number of reports, as the inquiry would conduct its business in modules.
He said he hoped to see proceedings get under way before the end of 2014, but that was a matter for the Oireachtas.
The judge in the Anglo Irish Bank trial yesterday ruled that a State agency led two former executives of the bank into error and illegality, and said it would be unjust to imprison the men.
Judge Martin Nolan adjourned sentencing of Anglo's former head of lending in Ireland, Patrick Whelan, and the bank's former finance director, William McAteer, to assess suitability for community service.
They were found guilty of giving illegal loans to ten developers to buy shares in the bank; a breach of Section 60 of the 1963 Companies Act.
The judge said the attitude and behaviour of the financial regulator had complicated the issue of sentencing.
Failures would not happen under new regime - Honohan
Central Bank Governor Patrick Honohan said today he is sure the regulatory failures criticised by the judge would not happen under the new regime.
He said there was a need for a banking inquiry.
Mr Honohan said it was unlikely it would reveal anything new about the causes of the banking crisis.
However, he said holding a public inquiry would be a good way of communicating what happened to the public.