Anglo has to be dealt with - Cowen

 

The Taoiseach this morning said people were rightly angry over the final estimated cost of the Anglo Irish Bank bailout, but added the situation had to be dealt with.

The Government this morning announced a final estimate for the cost of the Anglo Irish Bank bailout of at least €29.3 billion and has said AIB will require an additional €3 billion in funding and Irish Nationwide a further €2.7 billion.

Asked if he understood the public’s anger at the news regarding the final cost of restructuring Anglo Irish, Brian Cowen said: "Yes of course, of course people are rightly angry about it. But what we have to do is deal with the situation that confronts us.

"Were we not to deal with it, and [there are] some suggestions in the political and other quarters that you just let this go, there are huge costs, bigger costs for our country.”

The Central Bank said the final Anglo cost may rise by another €5 billion to €34.3 billion in the event of unexpected losses, namely if the Nama haircuts to the bank’s loans reaches 70 per cent.

Responding to the figures, Fine Gael spokesman Michael Noonan said the Government was like a gambler making all the wrong decisions. He said it thought Anglo Irish was too big too fail but had turned out to be "too big to save".

"The country has lost its creditworthiness, and that's why where can be no bond auctions between now and Christmas," he said.

"I don't believe that any director of any financial institution on whose watch the crisis occurred should be still in position. And yet this morning . . . up to 60 per cent of the directors were there when the bad decisions were made," Mr Noonan said. He added Fine Gael had argued appointments to the banks should not have been internal.

"They [the Government] made a series of decisions, and, uniquely in my view, they got every one of them wrong, and they're like the gambler who puts money on the first race and loses and then decides to double it on the second race. They're on the last race now, and they're putting in another €16 billion."

Labour also declared the Government's banks plan a gamble that failed.

Finance spokeswoman Joan Burton said today was "black Thursday" for the country. "We've had a two-year effort to shore up Anglo and sort it out, and that has failed. It's a gamble that failed, and Irish people have to pay the price for the gamble."

The Labour deputy leader blamed tax breaks and the resulting property bubble that "sowed our ruin," adding that Fianna Fáil are "very good at scoffing at other people's opinions and warnings".

Ms Burton said a bank resolution mechanism would have seen a negotiation with bondholders as it would have allowed "a level of future returns to those bondholders for making an arrangement now". She said one of the first items of legislation for a new government involving Labour would involve such a bank resolution mechanism.

She claimed a "very substantial" saving could have been made through this strategy.

"Reading the information that has become available this morning, the Government has set its face against doing any kind of structured negotiation with the senior bondholders. If the Government are going to do differently, perhaps they would tell us that.

"Basically, we are just going to have to rebuild this country. Our Government . . . has seriously damaged our reputation."

Conceding there were now levels of certainty regarding the figures relating to the bailout, Ms Burton said she was "very sad" that AIB was "in effect, going to have to be quasi-nationalised" and accused the Government of wasting a costly two years on its approach to the bank guarantee.

Sinn Féin Dáil leader Caoimhghín Ó Caoláin has tabled a motion of no confidence in Minister for Finance Brian Lenihan.

Speaking this morning, Mr Ó Caoláin said: “It is our belief that Minister Lenihan withheld information from the Dáil when he asked for support for the original bank guarantee scheme.

“It has since been revealed that Anglo Irish Bank was insolvent at the time and the Bill for the bailout is now set to be between €29 and €34 billion," the Sinn Féin TD said.

He called on Fine Gael and Labour to support his party's motion.