Taxpayer will not be hit by bank guarantee, Cowen tells Dáil

Taoiseach Brian Cowen said today that taxpayers will not be liable for any deficits that might occur as a result of the Government’s decision to place an unlimited guarantee on all deposits and certain debt in six Irish banks.

Speaking in the Dáil this afternoon, Mr Cowen claimed that the decision to introduce the guarantee was essential in order to protect the Irish financial system.

"In relation to what has been guaranteed I would like to point out to the House that what we are providing is a guarantee which is to deal with the basic problems relating to the banks, which has been accessing liquidity," Mr Cowen said.

"In taking this action the Government is first and foremost doing so in the interests and stability of the Irish economy and the long-term interests of the taxpayer. A secure and stable financial sector is essential to the Irish economy and is obviously in the best interests of the Irish people," he added.

The Taoiseach said that it was his intention that the Irish taxpayer would not "in any way be liable for any deficit" that might occur because the financial sector would have to discharge any liability which arose.

During leaders' questions, Fine Gael party leader Enda Kenny pushed the Taoiseach on whether the Government could reassure taxpayers "that nothing untoward is going to happen" following the decision to place the guarantee.

Mr Kenny also called on the Government to appoint personnel to the risk management committees of every bank and asked the Taoiseach to guarantee that there would be no more bonuses or dividends for those at the top of the financial sector.

"We do not want a situation in which the gains are privatised and the losses are socialised," said Mr Kenny.

Labour Party leader Eamon Gilmore asked the Taoiseach what benefits the guarantee would bring for taxpayers. This followed his comments made earlier today in which he expressed concern over the issuing of "the biggest blank cheque in history."

"What's in this for the taxpayer is clearly the ability to provide a stable banking system so that all businesses and all people who have deposits and interests in the banks and the commercial life of this country can continue in the very abnormal situation we find ourselves in today," said Mr Cowen.

"I have not provided any money to any bank. I have provided the reputation of this State to those banks so that they can gain access to funds so that the economic life of this country can continue," he added.

Mr Cowen said that in the event on a call on a bank the shareholders "would be the first people to have a problem".

“If a deficit emerges the sector will pay, not the Irish taxpayer, that is the commitment I am giving to the house,” said the Taoiseach.