Credit unions the only Anglo bondholders the Government has faced down
Money that could not be lent out during boom was moved for safety to banks
But this was not a problem because the State was guaranteeing all Anglo’s liabilities. Anglo’s deposits were transferred to the nationalised Allied Irish Bank. The credit unions asked for their bonds to be transferred to AIB as well. Anglo refused to do this on the basis that the bonds were time-limited and covered by the State’s guarantee for all of Anglo’s liabilities. They were perfectly safe. After all, if the State was willing to beggar itself to make sure that anonymous billionaire bondholders were not out of pocket, who could imagine that it would default on bonds owned by voluntary organisations that serve three million ordinary people on this island?
Indeed, the need to protect the poor little credit unions was frequently cited by ministers and TDs as one of the reasons for the blanket guarantee. And the idea that the State could not “discriminate between different types of bondholders” was cited by Brian Lenihan as a key reason for guaranteeing everything.
In February, however, the Government did its much-hyped deal on the promissory notes that had been signed for Anglo. As part of the scheme, Anglo’s successor, the IBRC, was liquidated. And, overnight, the credit union bonds that were to be paid out in September were vaporised. Only €100,000 will be returned - the rest is being defaulted on. Asked about this in the Dáil, Michael Noonan, the international bankers’ pussycat, turned into a tiger. He said it was all the fault of credit unions themselves: “I do not understand, when the State moved out virtually all deposits [from Anglo to AIB], the reason credit unions stayed in.” But the credit unions didn’t “stay in”. They asked several times for the bonds to be transferred to AIB but were told both that this couldn’t be done and that they were safe anyway.
So here’s the deal. Are you a foreign billionaire who, with your fellow billionaires, make up the great “international markets”? Then don’t worry about that little gamble you took on Anglo - here’s your money back and would you like us to rub some suntan lotion on your back? Are you a rural credit union with, say, 5,000 members, sitting on a loss of €500,000 because you did what you were told by the State? Tough. You have no bearing on the international markets. You were stupid. You should have known that the ratings agencies were inhaling laughing gas. It’s all your fault. But here’s a free nose-peg to keep the stench of hypocrisy out of your nostrils.