Banks move will double national debt, Bruton warns

THE MINISTER FOR FINANCE has failed to explain why the “truly huge” decision to further recapitalise Anglo-Irish Bank is the “least worst option”, according to Fine Gael finance spokesman Richard Bruton.

“I believe that what the Government is doing is choosing to nurse along the bad decisions of the past to protect professional investors,” he said.

During the Dáil debate on the recapitalisation of the banking system, Mr Bruton warned that the Minister’s decision would double the national debt. “We are today crossing the Rubicon. There can be no turning back from this decision. It’s a final step in the journey that the Government has taken and it is of truly huge proportions.”

It was the “final bill of reckless economic management that we’ve had to put up with for 10 years”.

He added: “Today’s decisions will bring to €40 billion the amount that the Irish taxpayer will be asked to put into Anglo Irish Bank, which was run in a truly buccaneering way by Seán FitzPatrick and his colleagues.”

When the guarantee was introduced “we were told this was going to be the cheapest bailout, in any country, of the banking system. How those words now look so hollow. When the first €11 billion of recapitalisation was introduced in this House we were told that this was going to see credit flow.”

How hollow have those words been? “And then when Nama came along we were told there was going to be a wall of money in the banks that would be available for lending and within weeks we heard the chief executives of the banks explaining the reality to us.

“So we don’t have a record of success from this Government as they turn to us now and ask us to accept on trust that this decision today should be taken without evidence being taken of the sort that would stand up to scrutiny.”

Mr Bruton said that up to a week ago “we were told the State’s injection was going to be €10 billion. Now we’re told it’s going to be €22 billion in recapitalisation. That’s 120 per cent more than we were led to believe. Anglo is going to absorb 70 per cent of the recapitalised money that you re putting in to get our banks going.”

The money “has gone into a black hole. Despite the rapid deterioration, every day we look at Anglo, it gets worse. But despite that the policy remains the same. There is no budging in the Government’s policy. The policy is that the taxpayer should be first over the hill to rescue this bank, not those who invested in it. And I can’t understand why this policy isn’t changing as the evidence comes out of what an abnormal bank Anglo Irish was, to the extent that it is jeopardising our future as a nation.”

He said “there is another strategy and that is the strategy that normally happens with a company that is not of systemic importance to the taxpayer.

“Its creditors take over and try to recover as much as they can. That’s what happens in capitalism. When people make investments that go sour, they take the consequences.

“That’s not an option considered by Anglo Irish or if it is, neither the Minister nor Anglo Irish presented an analysis . . . I have heard time and again it argued by spokesmen for the Government that to fail to protect bondholders in these banks would amount to an Irish default by the Irish people on its obligations. That is simply not true.”