Labour 'playing politics' with country's future

 

Minister for Finance Brian Lenihan accused the Labour party of “playing politics" with the country's economic future this evening saying the party’s policy on banking matters had been “characterised by a mixture of low political abuse and opportunism.”

“It has been clear since it opposed the Government Guarantee Scheme back in September, that the stability of the banking system and restoration of credit to the real economy is low on Labour’s order of priorities,” he said.

Mr Lenihan said Labour’s policy of wholesale nationalisation would do “absolutely nothing” to resolve the banks’ bad debt problems and get credit flowing again to support economic recovery and jobs.

"The only workable solution to that problem is the National Asset Management Agency. There is no doubt that the establishment and operation of this Agency will be challenging and will present us with potential practical and legal difficulties; we are in uncharted territory.

"But that is no reason not to pursue what we, and indeed the National Treasury Management Agency (NTMA), regard as the best solution to our banking problems," he added.

Earlier today, the deputy leader of the Labour Party and spokeswoman on finance Joan Burton said the government was intent on ignoring the warnings from Dr Michael Somers, chief executive of NTMA and others on the “ill-fated Nama proposal”.

“It is incredible that the Minister for Finance could so casually dismiss the very serious reservations expressed at the Public Accounts Committee last week by one of Ireland’s most distinguished public servants,” she said in a statement.

“Six weeks after the Minister first announced plans for the establishment of Nama, we have not yet seen any legislation to establish it, and the public is no clearer as to how it will work,” she said.

Mr Lenihan said the Government’s objective was to get the banks lending again so that the economy is ready to "take full advantage of the recovery that the world’s leading central bankers now say is in prospect."

"We firmly believe that a commercially focused banking system, which includes banks having a market presence, operating within market disciplines and constraints, is best equipped to achieve this aim," he said.

"Banks all over the world are struggling with damaged balance sheets, yet no country is currently adopting a policy of wholesale bank nationalisation."

"There is no immediate reason for Ireland to adopt such a policy. If Ireland was uniquely to proceed down that route it could, from an international perspective, be very damaging to Ireland’s reputation and attractiveness to international investors, not only from the perspective of the provision of funding to the banking sector but
from the perspective of international investment more generally," he added.