But the 30-year-old instead left Manchester City and joined Aston Villa in a £5million deal in August.
Wolves faces Aston Villa on Saturday.
“Dunne really is a terrific player,” said McCarthy.
“He’s been great for City and Ireland.
“I think sometimes clubs have to move things around but I’m still not convinced City have better defenders than Richard Dunne.
“Martin rang me about him in the summer and I said: ’I’d take him tomorrow’.
“In fact, I asked if he could come here because I think he’s one of the best in the league.
“He’s a great player and a terrific lad. He looks after himself – he didn’t look as lean and mean as he does now.”
