THE MAIN Opposition parties, Fine Gael and Labour, have taken diametrically opposing views on whether the major Irish banks should be nationalised.
Fine Gael deputy leader and finance spokesman Richard Bruton yesterday opposed bank nationalisation while Labour proposed a Dáil motion calling for the banks to be taken into public ownership.
Mr Bruton said that the early nationalisation of the banks, as proposed by Labour, would represent a huge risk to the taxpayers and the wider economy.
He said that Fine Gael had a distinct position on the Irish banks which involved the professional investors and bond markets, which had funded the reckless lending of Irish banks over the last decade, absorbing the lion’s share of the losses. “Under both Nama and nationalisation, loan losses will only be shared between ordinary shareholders and taxpayers, while other providers of long-term capital and funding walk away scot free. Call me old-fashioned, but this seems fundamentally unfair and a bad precedent for the future,” said Mr Bruton.
“Instead of wasting taxpayers’ money by propping up dodgy developer debt and bailing out international bond markets, the Government should invest scarce taxpayers’ money in clean banks with healthy balance sheets and an appetite to lend to struggling Irish businesses,” he added.
Mr Bruton said international evidence and domestic expert opinion suggested that the establishment of Nama would probably end up costing Irish taxpayers tens of billions of euro, thereby starving the public services of resources for a generation.
“Nama will effectively bail out the international bond markets which funded the reckless lending by Irish banks over the last five years,” said Mr Bruton.
In the Dáil last night, Labour leader Eamon Gilmore said the case for temporary nationalisation of the banks had been articulated clearly and convincingly by a group of 20 economists.
“This is not a matter of ideology – it is about brass tacks, and how people are going to survive in the real economy. It means putting aside vested interests and ideological blockages, to deal with an economic emergency,” he said.
Mr Gilmore said the Labour proposal for the temporary nationalisation of the institutions covered by the banking guarantee was the quickest, most effective and least costly means of dealing with the banking crisis.
“Its purpose is to ensure the restoration of credit to the Irish economy . . . The banks would be taken into public ownership for a limited period, during which time their balance sheets would be cleaned up, before being reprivatised at the earliest possible date. This will involve substantial State investment, but the amount will be far less than the Nama approach,” he said.
Mr Gilmore said that there was a need to face up to some realities about the bank guarantee introduced by the Government last year: “It effectively means that the State has to deal with the bad loans of the banks.”
Mr Gilmore said the Labour motion had not been introduced for ideological purposes but in the interests of job creation.