There was a culture of excessive executive pay in the banks, according to the banking inquiry report.

Recommendations in the report, released on Wednesday afternoon, include a personal clawback provision linked to medium-term performance which should be part of the employment contract for senior executive members.

According to the Oireachtas banking inquiry report, the Government's fiscal policy resulted in significant long-term expenditure commitments being made on the back of cyclical, transaction-based revenue streams that proved to be unsustainable.

The 11 member-committee invested hundreds of hours to hear from 128 witnesses about the events which led to the collapse of the Irish economy. The inquiry was established in November 2014 and held its first public hearings in December 2014, concluding in July last year.

The initial part was the context phase where economists, journalists and authors of previous banking reports were asked to give evidence before the committee. It then proceeded to the context phase where senior bankers, including former Irish Nationwide boss Michael Fingleton and former politicians including Brian Cowen and Bertie Ahern, gave their testimony.

In terms of the bank guarantee, the report finds the option did not arise for the first time on September 29th, 2008. It was noted in January, February and June 2008.

It also finds a draft press release announcing a six-month bank guarantee had been prepared by the Central Bank prior to 21.10pm on the night of the guarantee. This only covered deposits and interbank lending.

‘A thing of myth’

Chairman Ciaran Lynch said: “The night of the guarantee has become a thing of myth. The idea of a guarantee was not conceived on a single Monday night in September 2008; Department of Finance documents show that it was considered as part of a range of options as early as January 2008.

“Decision-makers, however, were forced to decide on a course of action in the absence of accurate information about the underlying health of financial institutions; no independent in-depth ‘deep dove’ investigating of the banks had been commissioned by the authorities by September 2008.”

Mr Lynch said the crisis in the banks was caused by the decisions by the board themselves. He said there were recommendations for future governments, the banks and other State institutions.

Mr Lynch said an independent budget office should be established and Oireachtas committees should be given more powers.

Fine Gael TD Eoghan Murphy and Fianna Fáil Senator Marc MacSharry criticised the refusal of the ECB to co-operate with the banking inquiry.

Mr Murphy said the committee was given no reason to why the organisation did not liaise with the inquiry.

Fianna Fáil TD Michael McGrath said the report was never going to be the full story because it could only scratch the surface of Anglo Irish Bank. He said members were extremely frustrated by the constraints of the legislation.

Fine Gael TD John Paul Phelan admitted there was a great deal of frustration with the chairman of the inquiry. However, he insisted Mr Lynch was a fair and balanced chairman with a very difficult job to do.

Bank of Ireland had internal discussions about a possible need for a capital injection from the State weeks after the bank guarantee was introduced, according to the inquiry.

The inquiry has detailed minutes from a board meeting on October 13th, 2008, indicating the bank could require taxpayer support.

The inquiry report outlines how the board declined to approach the government at the time, given the decision on September 29th to guarantee the banks.

The bank insisted this was not an opportune time due to the impending announcement of the budget.

The report finds the board discussed how it could request taxpayer investment as a source of equity.

The committee does not make this as a finding due to the objection of Bank of Ireland. In its response to the final report, the bank said this was misleading and incorrect.

Ultimately the bank received €3.5 billion in taxpayer recapitalisation in February 2009.

Threatened

The inquiry also found the European Central Bank explicitly threatened the government in March 2011, saying it would withdraw emergency support for Ireland's banks if losses were imposed on senior bondholders.

The sharply worded criticism heads the final report of the cross-party committee.

Meanwhile, it also finds that the then attorney general, Paul Gallagher, explored the possibility of burden-sharing with senior bondholders, with legal assistance from the International Monetary Fund (IMF), in November 2010.

However, it confirms a troika programme involving the ECB, IMF and the European Union could not have been agreed if the government had targeted senior bondholders.

The inquiry finds the ECB’s refusal to allow Ireland to force losses upon bondholders led to Irish citizens taking on “inappropriate” and significant banking debts.

The 375-page report is highly critical of the financial regulator, Central Bank, European Central Bank and the Fianna Fáil-led government.

Fianna Fáil TD Michael McGrath defended the report and said the committee has shed light on what happened during the crash.

Mr McGrath said many people have their minds up about what happened and who is to blame for it.

He said: “Could we have done more if we had less constraints and more time yes but the Oireachtas signed off on the legislation.”