Kenny responds to criticism over 'borrowing' comments

Taoiseach Enda Kenny at the World Economic Forum in Davos. Photograph: Christian Hartmann/Reuters

IRISH TIMES REPORTERS

Taoiseach Enda Kenny has responded to criticism of his comments regarding the cause of Ireland's economic crash.

Speaking during a discussion on rebuilding Europe at the forum in Davos yesterday, Mr Kenny sparked a storm of controversy when he said the country's financial crisis happened because "people went mad borrowing".

However, tonight Mr Kenny said: "When I was at home I made it clear in my state of the nation address to the people that it was not the people’s fault. Yesterday in a panel discussion with the Danish and Finnish prime ministers I set in context what happened in Ireland".

"We had very poor regulation, incompetent government - we had a system in the banking regime that paid big bonuses on volume lending which meant that developers, in the sense of buying and proposing schemes that could never be paid by people, brought our country over the edge. I set that in context very clearly," he said in an interview with CNN.

He added: “That means that situation that my Government inherited was unprecedented which means you’ve got to balance a programme of austerity with a programme of initiative and growth which the government is doing within the constraints that are imposed on us by the memorandum of understanding by the troika.”

Mr Kenny's originally remarks, however, have been widely criticised by Opposition politicians.

Fianna Fáil TD John McGuinness said earlier today Mr Kenny's credibility had been damaged.

"When you are delivering a message like that, whether it is in Dublin or Davos, if you are sincere about the message it will be the same," he said.

His party colleague Niall Collins said there was a "stark contrast" between the Taoiseach's comments yesterday and those in his address to the nation last month, "when he told the public that 'it's not your fault' for the crisis".

Sinn Féin TD Pádraig Mac Lochlainn said: "This analysis that people in Ireland went drunk with credit, were reckless and they have to now be cleansed by a decade of austerity to clean them of their sins is very worrying."

Social Justice Ireland campaigner Fr Seán Healy described the remarks as extraordinarily lopsided.

Speaking in Dublin this morning, Minister for Health James Reilly defended the Taoiseach's comments.

"There's absolutely no doubt that people were encouraged by reckless lenders and banks to borrow and encouraged further by the government of the day," he said. "People had money shoved at them, we know that...the type of lending that went on at that time was clearly reckless and has clearly led us to where we are now."

The comments were also defended by Minister for Transport Leo Varadkar. "We can all admit that the moral flaw at the heart of the crisis was greed and some people were greedy, but everyone was not," he said. "A lot of people just got by on what they had, bought the house they could afford to buy. But at the same time there were other people who borrowed too much, who spent too much and who made foolish investments and we are all paying for the price of that."

Minister for the Environment Phil Hogan said the comments had been blown out of all proportion by the media and Opposition parties while Minister for Enterprise Richard Bruton said Mr Kenny has already made it clear that the ordinary people of Ireland are not the blame for the crash. "No-one is more in touch with the anguish people are feeling than the Taoiseach," he said.

Irish businessman Denis O'Brien said that while yesterday's remarks were important, Mr Kenny's presence at this year's World Economic Forum was more significant for creating a "buzz about Ireland".

"He should be applauded not in any way criticised," Mr O’Brien told The Irish Times.  "We need to say, 'hands up we may have got it wrong' but the balance of that is that we are the only country in Europe that, after making difficult decisions to fix our economy, will meet our promises."

Mr O'Brien, in Davos to discuss the involvement of his companies in Haiti reconstruction efforts, said leaders he had spoken to had appreciated the Taoiseach’s presence and his straight talking.

"Our Taoiseach is one of the few leaders who have come to Davos and actually been honest," he said. "The fact that he’s up on the stage as our prime minister is very important as we need more investment and confidence as we return to the capital markets."