OPPOSITION REACTION:FINE GAEL has given a "guarded welcome" to the Government's move to shore up the banking system, but this should not be regarded as a "blank cheque", party leader Enda Kenny told reporters at Leinster House yesterday.
Describing the Government's initiative as a "firewall", he said: "We don't know as we're speaking here whether this is going to work or not." He called for a freeze on bonuses and "super-payments" to bankers for the duration of the Government's guarantee.
Mr Kenny continued: "The Fine Gael party will continue to act responsibly in opposition and our primary concern here is for the protection of the Irish economy and Irish taxpayers' interests.
"We give a guarded welcome to this announcement by the Government in that context. This is not a blank cheque from Fine Gael.
"There are a range of questions that need to be answered and addressed by the Government. We need to know the true extent of exposure. We need to know what new regulatory regime will be put in place, so banks will not be allowed to indulge in any risky lending or other derivative trading."
He continued: "I assume that the Government . . . are now fully apprised of the extent of bad debt within the banking system and that's why I think there should be a freeze now on any further bonuses or super-payments to bankers during the duration of this."
Fine Gael deputy leader and finance spokesman Richard Bruton said: "The importance of this guarantee is that it is guaranteeing depositors. The risk even to a very strong bank if depositors lose confidence and pull their money out - that bank goes down.
"Now we're getting assurances from the regulators that Irish banks are commercially sound."
Mr Bruton added: "We must know that this money, which we are now guaranteeing, is not used for reckless lending in the future, so there has to be proper regulation. We need to know what are the terms and conditions so that the taxpayers' position is protected, we need to know what are the charges . . . for this."
Labour Party leader Eamon Gilmore has warned that if the Government's intervention failed, "the country could be sunk". His party hoped it would succeed and, if it kept the banking system stable, that would be great. He claimed that in effect, the Government had "bet the country on the banks".
"If the State is going to underwrite and provide a guarantee - effectively write an insurance policy for the banking system - shouldn't the State at least have the option of buying the shares at yesterday's [Monday's] price?"
Deputy leader and finance spokeswoman Joan Burton asked if the Government had carried out "due diligence" before its intervention. "In giving an absolutely unlimited, unconditional guarantee," she said, "it seems as though the Government has taken all the banks' balance sheets as being the same. People who are in there for very reckless lending in relation to construction and speculation in land, that they will get a guarantee just as much as the person who is involved in ordinary commerce, providing jobs and not engaging in excessively speculative activity".
Mr Gilmore said: "The package proposed by the Government amounts to two to three times the GNP. This move will also have very serious consequences for the debt level and the cost of borrowing for this country. "
Sinn Féin was not notified in advance about the Government's intervention, unlike other Opposition parties, its finance spokesman Arthur Morgan said yesterday.
"I don't know if it was fatigue on the part of the department's senior officials and the Minister perhaps because of the late nights they were enduring, or if it's some kind of change in tack," he said.
