An Irish Times journalist who covered the financial crash has told the Banking Inquiry that the relationship between the property and construction sectors, Government, banks and the Financial Regulator was extremely cosy.
Simon Carswell said regulation by the Central Bank was not assertive or intrusive and was too passive and deferential.
He said bankers could argue their way out with the regulator.
He said responsibility lay primarily with the boards and management of banks and then the Central Bank and regulatory authorities.
Mr Carswell, who wrote a book on Anglo Irish Bank, told the inquiry the bank had two fatal flaws - too much concentration of lending in the property sector and it was too close to its borrowers.
He said other banks copied the Anglo model.
Mr Carswell said Anglo was allowed to balloon out of control and the regulators knew it was aware of its own breaches of lending limits.
He said there was a strong link between the bank's boardroom and Government Buildings, saying that Anglo and Fianna Fáil were close.
However he added that his research led him to believe those contacts bore little fruit, although he added that the party and property developers were also close.
Mr Carswell said the cost of the banking crash was far greater that the €64bn figure frequently cited as around €100bn was written off on loans; including tens of billions underwritten by the British Treasury.
He cited large levels of political donations especially to Fianna Fáil and the lobbying undertaken including heavy lobbying by the construction sector. He said the new lobbying bill providing for a compulsory register was a step in the right direction.
Mr Carswell pointed out that there were two particular concentrations in lending, which should have raised alarm bells.
They were a surge between 1997 and 2001, and 2002 and 2007.
He said that, in the early noughties, the regulator should have stepped in.
He said Anglo also used the Bank Guarantee to attract deposits, as did other banks, even though they were told not to.
Independent Senator Sean Barrett asked Mr Carswell whether he had come across contrarians in the banks, the regulator or auditors.
He said there was one person in AIB who had major reservations about what the banks was doing in the property sector and who raised it at a very senior level.
Later, Labour Senator Susan O'Keeffe asked whether those reservations were taken on board. Mr Carswell said they were not.
She also asked whether Mr Carswell's phone had ever been tapped or whether he had been asked to stop reporting and he said no.
Fianna Fáil's Michael McGrath asked whether Anglo knew it was facing an existential crisis at the time of the bank guarantee.
Mr Carswell said it did as it applied to AIB and Bank of Ireland for emergency funding that day and knew it would run out of money that night.
He said there was very little paperwork on the night of the guarantee.
The inquiry has concluded for today.
