POLITICAL REACTION:THE GOVERNMENT's bank recapitalisation programme was last night described as "a €7 billion gamble on the wrong horse" by Fine Gael.
The party’s deputy leader and finance spokesman, Richard Bruton, said he feared the approach adopted by the Government would not kick-start the economy, and it was likely a further costly recapitalisation would need to take place.
He said that Fine Gael’s alternative model of splitting each bank into a good bank and a “legacy” – or bad – bank was preferable. He said the good banks would be in a position to lend and also have clean balance sheet. They would provide the credit flow needed by the economy, he argued.
“The Government announcement has barely moved on from the announcement made in December. Fine Gael also regrets that a flat income cap has not been imposed on executive pay.”
Labour Party deputy leader Joan Burton said the plan was a “missed opportunity” and accused the Government of allowing the banks to dictate the terms.
“It is difficult to identify with any certainty what the upside, if any, for the taxpayer will be in respect of owning a stake in each bank. The maximum stake would be 25 per cent of ordinary shares, too low a threshold for what the taxpayer is paying and the risk involved. The complex formula in respect of a 25 per cent stake may in the end turn out to be nothing at all.”
Like Mr Bruton, she was critical of the level of reductions in the pay packages of the banks’ most senior executives. She also expressed disappointment that only a 12-month conditional moratorium would be applied to home repossession, not the two years sought by Labour.
Sinn Féin’s spokesman on finance Arthur Morgan said that the terms agreed including the moratorium on home possession were tokenistic gestures. “Sinn Féin feels that executives who received bonuses over the last three years should be forced to give them back,” he said.