Deficit more serious than bank crisis - Lenihan

FF MEETING:MINISTER FOR Finance Brian Lenihan told Fianna Fáil TDs and Senators yesterday that while the cost of winding down the bank added to fiscal difficulties, the large gap between State spending on public services and revenues was the more serious problem.

“So, for example, if €30 billion of capital is required, then the annual cost of resolving the banks would be €1.5 billion. This is a significant amount, but has to be compared with a budget deficit in 2010 of €18.5 billion,” read a handout from the Minister distributed at a Fianna Fáil parliamentary party meeting.

Mr Lenihan briefed the meeting on the banking crisis and guarantee scheme “in his usual totally competent, fully understandable, brilliantly communicated way”, according to one supportive deputy. However, Cork East TD Ned O’Keeffe attacked Mr Lenihan’s policies, calling for a reshuffle to replace Mr Lenihan as Minister for Finance.

Mr O’Keeffe described the National Asset Management Agency (Nama) as a “third-world policy” and asked Mr Lenihan if the idea for it had come “from Indonesia”. When Mr Lenihan responded that it was in fact a “Swedish model”, this prompted laughter.

Mr Lenihan also urged members to be cautious about making “irresponsible statements” which could be picked up by international media and markets.

Meanwhile, it was confirmed Fianna Fáil will hold a special party meeting to discuss its communications strategy within weeks. Taoiseach Brian Cowen’s leadership of the party will also be discussed.

Carlow-Kilkenny TD John McGuinness, a regular critic of Mr Cowen, said half the party’s TDs could receive “their P45s” from the electorate and lose their seats. In this context, Mr McGuinness told Mr Cowen: “You’re no longer a Taoiseach on probation, you’re a Taoiseach on notice.”

The confirmation of the special meeting follows former chief whip Tom Kitt’s call for the party to discuss the leadership last week, when he said Mr Cowen was not communicating with or connecting properly with the electorate and should step down. Yesterday Mr Kitt told the meeting there had been no progress and it was vital the party met again to discuss this and “clear the air”.

Speaking after the meeting, Mr Kitt said: “My analysis of the situation right now is that there’s no issue as regards the leadership as there’s no member of Cabinet seeking the position, so that deals with that.”