Dáil extends bank guarantee
The Dáil has voted 83-74 to extend the bank guarantee for a further three months ahead of the lapse at midnight of the previous guarantee.
In a two-hour debate there was trenchant opposition criticism of banking policy and a claim by Government backbencher Ned O’Keeffe (FF, Cork East) that “we were sold a pig in a poke”.
He expressed concern about how “we’re directing our banking system”, condemned the National Asset Management Agency and said it was “about time that the Minister for Finance put all this to bed”.
Brian Lenihan said the guarantee was different from the original one, which had provided for a blanket guarantee of the deposits and liabilities of Irish institutions by the Government in the face of clear and present danger to the financial stability of the State.
The latest, he said, was more focused and targeted than the original scheme and in line with the European model of bank guarantees developed in its wake.
The scheme no longer covered subordinated debt and it imposed significantly higher fees on participating institutions for the benefit of a State guarantee of their liabilities.
The Government had acted to reform the system of regulation, he said, adding that the appointment of Prof Patrick Honohan as Central Bank governor and Matthew Elderfield as head of reulgation had been welcomed by all.
He said he was appointing five members of the Central Bank commission, which was the unitary board with responsibility for the bank’s activities and functions. These were: Max Watson, Prof John Fitzgerald, Des Geraghty, Michael Soden and Prof Blanaid Clarke.
FG spokesman Michael Noonan said his party would only support the Government if it accepted an amendment to the motion introduced by Mr Lenihan.
This, he said, provided for the introduction of legislation before November to set up a bank resolution system giving the Central Bank powers to wind down or break up failing banks and to equitably share the costs with professional providers of capital and long-term funding.
The amendment also called on the Government to require Anglo Irish Bank to immediately commence negotiations with the holders of subordinated bonds to alleviate the costs of the wind-down to the taxpayer. But the amendment was disallowed because the Dail could only approve or reject the motion.
Mr Noonan said his party believed that it was misled by the Minister two years ago.
Labour spokeswoman Joan Burton said the reputations of the Taoiseach and the Minister had been shredded “as umpteen billions are carted into the Anglo incinerator despite their vulgar promies to the Irish people that their policy would be the ‘cheapest bank bailout’ in history’’.
Mr Lenihan, she said, had to look back on that fateful night of two years ago and see “the complete bonfire of the vanity he displayed that week’’.
Sinn Féin finance spokesman Arthur Morgan warned that an exit strategy from the debt crisis had to be established along with a new system of public banking.
“The Government should not be allowed to extend this guarantee scheme for another three days never mind another three months,” he said. His party believed that “a State bank should be created by nationalising AIB & BOI.
We should nationalise the positive assets, including the deposits and performing loans, of AIB and BOI, and to transfer these into a new State Bank. “We must allow the banking guarantee to lapse and allow the remaining assets of AIB, BOI and Irish Nationwide to be divided up between the bondholders of those institutions. And we should guarantee all deposits in the State bank.”