This paper develops a restrictive procedure for evaluating economic policy decisions, by comparing actual economic history with a simulated history where a specific policy decision is replaced with a counterfactual, but credible, alternative. We apply the procedure to the mistaken decision to impose excessively lax banking sector risk regulation in Ireland during the period 200308. We measure the differences in banking sector stability and national income that would have occurred if the stricter regulatory approach enforced in Ireland in 2009 had been put in place six years earlier. We find that a few simple, reasonably prudent regulatory controls on the Irish banking sector would have greatly limited the vulnerability of the domestic sector to the 2008 global credit freeze and almost certainly prevented the 200809 collapse of the domestic banking sector and the consequent deep Irish recession of 200910. On the other hand, the risky and unsustainable inflow of foreign capital mediated by the domestic banks accounts for a substantial part of Irish economic growth during the 200307 period. Without this net foreign borrowing inflow, cumulative gross domestic product over the early period would have been substantially lower.