An international expert has told the Banking Inquiry that Anglo Irish Bank should have been nationalised a long time before it was.
Professor Edward Kane from Boston College said nationalistaion was in the taxpayers’ interest.
He also said bankers will always claim to have a liquidity problem when it may actually be an insolvency issue.
Prof Kane said the culture was to give banks the benefit of the doubt that it was a liquidity problem even though bankers may know it was an insolvency issue.
He added that bankers routinely abuse rules without suffering meaningful penalties, adding most penalties have been focused on corporations and not on individuals.
Fine Gael TD Kieran O'Donnell asked what could have been done earlier and would have saved the taxpayer money.
Prof Kane said that, hypothetically, when any bank is growing rapidly relative to the industry and with a concentration of loans, a team should be sent in to try to figure out the taxpayers' stake in the firm and to collect value for the taxpayer.
He also said that a bank was a zombie bank when it was only in business because of guarantees, then it would ideally be best to act when approaching that condition.
Sinn Féin TD Pearse Doherty asked whether it would have been better to nationalise Anglo or to give it guarantees - Prof Kane said the bank was enjoying implicit guarantees and didn't stop taking risks until it was taken over.
He said Anglo was a bank whose loss-taking had to be stopped and attempts had to be made to restructure and refloat it as a private entity.
Prof Kane said blanket guarantees were the easiest type of guarantee to give politically and administratively.
He also told the inquiry that Ireland should have worked a harder deal with Europe but was not in a position to dictate terms due to its small size.
However, he said Ireland showed a lot of "gumption" in handling its situation.
He said there was a failure to completely design the European Monetary Union, meaning a formal loss allocation method was never established and they were just winging it.
Earlier, Prof Kane said he was only a little bit familiar with the Irish banking system and was not a student of it.
