An inquiry investigating alleged breaches at the now defunct Irish Nationwide has heard from legal counsel for its former chairman Michael Walsh.
Michael Collins SC, who is representing Mr Walsh, was critical of the Central Bank's role in the lead-up to the financial crisis, saying the regulator had all the relevant information on the lender it needed but took no action.
He pointed to the Central Bank's financial stability report from 2006, which saw no problems with the Irish banking sector in 2004, 2005, and 2006.
The report also mentions that the Irish banking sector was then seen as the "poster boy of Europe".
Mr Collins also referenced an assessment from ratings agency Standard & Poor's, which identified Irish banks as having ratings between 2003 and 2008 that were among the best in Europe.
He said a separate assessment from S&P's said the potential for a nationwide banking crisis appeared lower in 2006 "than at any time in the last decade", adding it was looking like "a golden age for global banking".
Mr Collins said the ratings agencies were slow to recognise the impending financial crash, but his client was not.
He said Mr Walsh warned the Central Bank in 2007 about impending issues in the banking sector.
Mr Collins also said Mr Walsh told the regulator the Irish financial system was in danger of collapse if it did not take steps, which were not taken.
He added that in September 2007 the board of Irish Nationwide, on the suggestion of Mr Walsh, took the decision to cease commercial lending and attempt to build liquidity.
Mr Walsh stated he informed the Central Bank of his decision.
Mr Collins said the INBS approach was in contrast to the "hell for leather" lending at other financial institutions into 2008.
He pointed to a report from EBS, which said it expanded aggressively in 2008 - capturing a 40% market share of new mortgages that year.
Walsh never took decisions himself - legal counsel
Mr Collins said Mr Walsh only served as non-executive director of Irish Nationwide, never taking decisions.
He added that Mr Walsh's only power was in his role of chairman, which meant he had a casting vote when required. But this situation never arose, he added.
He also said Mr Walsh was never a member of Irish Nationwide Building Society's credit committee.
Mr Collins also said allegations initially made by the Central Bank against all non-executive directors at the building society were later dropped, except for the allegations against Mr Walsh.
Mr Collins said that when he asked for an explanation that justified the regulator maintaining allegations against Mr Walsh and not other non-executive directors, he never got an answer.
The public hearings are into alleged breaches of the Central Bank Act by five key figures at the former financial institution, including Mr Walsh.
The other accused are former managing director Michael Fingleton, former company secretary Stan Purcell, former head of commercial lending Tom McMenamin, and William Garfield McCollum, who headed Irish Nationwide's UK lending.
Yesterday, Mr Fingleton gave his opening statement to the inquiry, which he said was an "artificially trumped up case" to deflect attention from the failings of the Department of Finance and the Central Bank in the lead-up to the financial crisis.
Mr Fingleton is not in attendance at the third day of the inquiry.
The suspected breaches relate to the way the former building society allegedly failed to process loans in line with policies, allegedly failed to vary loans in line with policies and allegedly failed to get valuations in line with policies.
They also relate to alleged failure to ensure commercial lending was in internal policies, alleged failure to ensure that reports on commercial lending were supplied to the board and that profit share agreements were in line with risk policies.
It covers issues surrounding insufficient controls and reporting arrangements in place with regard to the Credit Committee, as well as a possible failure to act in line with legal requirements.
Irish Nationwide was wound up in 2011, with a cost of €5.4 billion to the taxpayer.
The Central Bank has powers to impose sanctions of up to €500,000 on individuals in relation to any determinations made at the inquiry.