DUBLIN (Bloomberg) - Property developers in Ireland "went too far" during the real estate boom, according to Dan Rooney, the US ambassador to the country.

"There were many developments all over the place: houses, buildings, different programs," Mr. Rooney, 77, co-owner of the Super Bowl-winning Pittsburgh Steelers, said in an interview in his Dublin office. "We did the same thing on Wall Street. This seems to be human nature. We have to overcome it."

Ireland's economy, once the most dynamic in Europe, is shrinking at the fastest pace in the euro region, as a decade- long property boom shuddered to a halt. Gross domestic product will shrink about 7.5 percent this year, as companies including Royal Bank of Scotland Group plc. and Dell Inc. cut jobs.

Home prices have fallen by about 45 percent from their peak in 2007, and Prime Minister Brian Cowen's government is setting up a state asset agency to purge lenders led by Allied Irish Banks plc. of souring real-estate loans.

"I knew coming here there was a problem with the economy," said Mr. Rooney, whose father started the Pittsburgh team 1933. "But maybe it was a little deeper than I thought."

The agency is a "necessity", Mr. Rooney said, adding the economy still faces "major problems". "The leadership is doing everything they can. They are capable."

Mr. Rooney said the global economy is in a "tough situation" and will struggle next year before recovering. The so-called Celtic Tiger decade produced enough positive changes to help Ireland emerge from the recession, he said.

"The US has made the turn," said Mr. Rooney, who took up his job in July. Ireland has "bottomed out, and is beginning to make a little bit of a turn".

On May 4, President Barack Obama said he planned to raise about $190 billion during the next 10 years partly by curtailing the ability of US-based multinationals to write off the costs of overseas units against domestic tax liabilities.

That sparked concern that US companies operating in Ireland including Microsoft Corp., the world's largest software maker, and Intel Corp., the largest maker of computer chips, may limit overseas investment.

Mr. Rooney said Obama does not consider Ireland to be a tax haven and that US companies operating in the country aren't going to be at a "grave disadvantage".

"Are they going to pay more taxes?" he said. "We'll have to wait to see."