Comments by Lenihan on Government guarantee

Below is a selection of comments from the Minister of Finance Brian Lenihan at a press conference at the Department of Finance this morning to explain the Government’s guarantee scheme.

“We are not in the business here of bailing out banks or assisting those who have invested on a risk basis in a bank. The shareholders take the risks on the markets. What we are guaranteeing is the lifeblood of the banking system – a system of lending and borrowing that is essential to the successful operation of any banking system.”

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“The position of the EU is that the member state is responsible for the stability of its own banking system and we are responsible at these particular banks and I am satisfied that the decision of the Government is another element in the strategy of maintaining confidence in our banking sector.”

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“Everyone can see that liquidity has come very scarce indeed in the world banking system since the collapse of Lehman Bros in the United States. My personal view is that the United States authorities were mistaken in permitting that bank to go to the wall. It has had very serious consequences for the world financial system.”

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“I do not see a hazard or an exposure to the decision that I have arrived at because the taxpayer has a vital interest in seeing that the blood stream of our banking system is maintained. Were liquidity to dry up in the Irish banking system in the weeks ahead the inevitable result would be economic catastrophe for this country.”

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“We are a small, exposed economy who are more globally exposed than any economy in any other member state in the European Union. For us not to have a viable banking system would paralyse the trade of this country and reduce us to a powerless position in all the markets in which we buy and sell our goods and services.”

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“We have to have faith in ourselves as a nation and a people that we are capable of having a viable banking system.”

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“It is a tendency towards economic nationalism and I regret that but we are on our own here in Ireland and the Government has to act in the interests of the Irish people.”

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“It is important that Europe protects its financial system but in the absence of a Europe-wide system there is an onus on the Irish Government as the sovereign body with responsibility in this State to take action and that is what we have done.”

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“We cannot afford to let the financial bloodstream of the country and the banking system dry up.”

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“We are not talking about collapse here. We are talking about maintaining stability.”

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“Let’s be clear about this – the Government is not underwriting shareholders’ funds, risk or hazardous investment in the banks. The Government is looking at ways to outline ways to help the banks. We are guaranteeing liquidity generally because of the liquidity problems that exist on the political stage.”

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“Let’s be clear – the markets are entitled to make their judgements about the banks and they have been making very severe judgements about them and we are not interfering in that process and we do not intend to interfere in that process.”

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“The most important issue at this stage – and what I have to devote my energies to – is ensuring confidence in the system that is there and ensuring the confidence in the system that is there and ensuring the highest levels of competence and efficiency in the regulation system that’s there.”

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“We are in an eye of the storm here and it’s not a time to have expensive arguments about the nature of regulation. It is time for action – swift and decisive.”