The Government has rejected claims that it was warned about a possible banking crisis by the Department of Finance nine months before it introduced the blanket bank guarantee.
Fine Gael Finance spokesperson Michael Noonan said there were documents to prove the coalition was warned in January 2008 that trouble lay ahead.
Mr Noonan said Brian Cowen was 'asleep on the job' and was not making hard decisions over the banks.
Speaking on RTÉ’s This Week programme, said the Department advocated that the legal mechanisms should be put in place so that banks could be put into examinership.
He said a month later the Department advised against a global guarantee.
Mr Noonan also said there are documents that show the bank crisis was signalled when Taoiseach Brian Cowen was Minister for Finance.
Mr Noonan said the Government's excuse that the banking crisis 'was bounced on them and they had to act within hours and did the best with the information they had' is not true.
He said Mr Cowen got advice that the issue of examinership should be put in place and it would have required legislation and changes in company law.
Mr Noonan said that Merrill Lynch advised against a blanket guarantee and that Anglo should be turned into a 'bad bank' for impaired loans of the banking system.
He said Secretary General in the Department of Finance David Doyle also indicated at a meeting that he thought a 'black hole' of €8.5bn was emerging in Anglo Irish Bank and €2.5bn at Irish Nationwide.
Mr Noonan said Merrill Lynch also recommended strongly against certain courses of action and one of which was to guarantee everything including subordinated debt.
He said Merrill Lynch advised that this would send out a signal that would be bad for Ireland and the markets, which in effect would make international financiers see Ireland as a suspect case and they would raise interest rates.
Mr Noonan said this was what subsequently happened.
He said we now know that it was not something that happened at the last minute and that we know there was other information, especially from the Department of Finance.
The information from it was suggesting that it was not just a fear of liquidity, that there might be a run on the banks, but there was also the fear that the banks would go bust.
Mr Noonan said this was clearly signalled by the Secretary of the Department of Finance a week before the guarantee.
Ó Cuiv hits back at Noonan claims
The Minister for Social Protection has hit back at the claims by Mr Noonan.
Éamon Ó Cuiv said Mr Noonan's claim was factually incorrect, adding that the reality was that the crisis grew over time but came to a head in September.
At that stage, Mr Ó Cuiv said, action had to be taken, and a whole lot of options were given to the Government by Merrill Lynch.
He said the option taken was the best option.
Mr Ó Cuiv said the only option that was ruled out because it was not viable was the option of letting a bank fail.
This, he added, was an option later suggested by some of the opposition parties.
He said a blanket guarantee was chosen as the best way to keep confidence in the banks, adding that it has proven to be the right and best option in the interests of the people.
