The Governor of the Central Bank has told the Oireachtas banking inquiry that Anglo Irish Bank had already failed in September 2008, and should have been nationalised rather than placed under the Bank Guarantee.

Patrick Honohan is making his second appearance before the banking inquiry today, where he is being questioned by cross-party TDs.

“(Anglo Irish Bank) had already failed because they had run out of cash (in 2008),” he said.

“It is a bank failure which was overlaid by the guarantee, which brought them back to life.”

Mr Honohan said the then Taoiseach Brian Cowen and Finance Minister Brian Lenihan should have nationalised the bank, removing the management of the time.

“What they should have done, with the information available they should have nationalised Anglo Irish Bank,” he said.

Mr Honohan did however say that the bulk of damage done to Ireland was already complete before the night of the guarantee.

“I would hazard a figure of at least 80-90% of the overall hardship was, albeit unknown to the decision makers that night, already inescapably embedded in the situation.

“The damage had been made unavoidable by the unrestrained credit and property boom,” he said.

He told the Inquiry that “nationalising Anglo Irish Bank would not have saved the country the projected €40bn the guarantee is expected to end up costing the country.”

Having previously appeared before the inquiry in January, Mr Honhan is today appearing in order to clarify some of the points made during his initial appearance. In January he said that Mr Lenihan had wanted to nationalise Anglo Irish Bank on the night of the guarantee but was overruled.

Mr Honohan became visibly aggravated during a particular series of questions from Sinn Féin TD Pearse Doherty.

Doherty was asking Honohan for clarification about a note from former secretary general of the Department of Finance, David Doyle, to Kevin Cardiff, the former assistant secretary general.

Mr Honohan became agitated, banging the table at times as he replied, saying:

“I’m not satisfied with this line of questioning because I’m here to help this inquiry.

“It’s perfectly possible for you to put me in a position here I look as if I don’t know anything about anything, because I speak very carelessly,” he said.

“I’m sorry we appear to be at loggerheads here,” Doherty said.