Lenihan misled by banks over extent of losses, says Noonan

BRIAN LENIHAN as minister for finance was misled with the information provided to him by the banks, the Dáil was told.

“When he came into the Dáil first talking about Anglo Irish he said their total liabilities were €1.5 billion,” said Minister for Finance Michael Noonan.

“And it crept up by instalments until it went up to €33 billion. And he followed the bait all the way up along, because having taken the first step to guarantee he couldn’t get off the roundabout. And that was the essential problem.”

Mr Noonan said it was a “tragedy but that’s what happened and that’s why we are left in a very difficult situation now”.

He was speaking during a Sinn Féin private member’s motion calling for the Government to suspend promissory payment which the party’s finance spokesman Pearse Doherty said could cost the taxpayer up to €90 billion over the next 20 years.

He said it was truly shocking that Fine Gael and Labour would support the Fianna Fáil-Green government’s actions.

Peter Mathews (FG, Dublin South) said he would support the Government’s amendment “under protest” because he believed the State deserved a “severe writedown” of its debt.

Mr Noonan told Fianna Fáil TDs that “there was an alternative” to the bank guarantee. “You could have put Anglo into administration and let it work out and let the debts fall where they will. So there was a solution.”

But he said “if we were to suspend payments to the bank’s creditors it would have a significant impact on both the bank and ultimately the State”.

He was however “eager to have the promissory notes examined to see if they can be re-engineered in a better way for the State” such as lengthening their maturity or educing the interest rates on them, or both.

Discussions are ongoing with the relevant authorities at a technical level. He said it had always been his position that given the significant cost of Anglo and Irish Nationwide Building Society to the Irish taxpayer, there should be no repayment of unguaranteed unsecured senior bonds.

“To avoid such repayments, the most logical option would have been to put the bank into administration. This was an option available to the previous government but instead they put the taxpayer on the line for the liabilities.”

Fianna Fáil finance spokesman Michael McGrath said “we all acknowledge that the information was flawed. The banks told mistruths”, he said but insisted “there was no credible alternative”.

Mr McGrath criticised Mr Noonan who had told him to “get off the stage”.

The Cork South Central TD said there were €36 billion of unguaranteed senior bonds and “the Government is going to pay every penny back and they are not part of the bank guarantee”.