OPPOSITION REACTION:FORMER MINISTER for finance Brian Lenihan has said the approach of his successor, Michael Noonan, on banking issues yesterday was no different from the one he would have adopted if he were still in government.
Speaking to reporters at Leinster House, he said Mr Noonan had “fully supported the EU-IMF agreement and the whole text of the speech was the same speech I would have delivered in the same circumstances”.
Dismissing Mr Noonan’s comparison of the previous government’s bank guarantee scheme with the start of the Irish Civil War, Mr Lenihan said it was no more than “a rhetorical flourish”.
Mr Noonan had voted for the guarantee scheme when it was introduced, along with the rest of the Fine Gael party. “The standard used in the stress tests was a very severe one,” Mr Lenihan said, adding that the assumptions were “very, very pessimistic”.
He said: “I don’t believe the economy is in for as rough a ride as that. If we are, God help us all.”
Mr Lenihan said the “one serious omission” in the Minister’s speech, and it was a “very serious” one, was that there was no reference to the position of the European Central Bank.
“We’re all grown-ups here, we all saw what appeared in the newspapers last weekend,” he said.
These reports had suggested there was an emerging agreement with the ECB and that yesterday’s announcement would be accompanied by news of medium-term funding support for the Irish banks.
“A figure of €60 billion was specifically mentioned,” Mr Lenihan said. “None of that was announced by the Minister today, none of it was announced from Frankfurt.”
Sinn Féin finance spokesman Pearse Doherty noted that the Minister had not referred to the Government programme plan for a €2 billion strategic investment bank and he wondered if it was now shelved.
“He also didn’t mention the whole issue of senior bondholders,” he told journalists at Leinster House.
The Sinn Féin spokesman said the “big question” was: “Is it right that we pay the debt of the banks?” The second question was: “Can the actual State stay afloat if we do so?”
He believed the point of unsustainability had now been passed: “If we have done so, this is a bigger issue than a banking crisis now – it has gone into a sovereign debt and default crisis.”
The point had been reached, “where we can no longer afford to pay the interest rates or to pay our debts”, Mr Doherty said.
“With the figures released today, with €24 billion required in our banks and maybe additional [funds] required for Anglo and Nationwide, then I believe that we have surpassed that point.”
Mr Doherty said he did not have confidence in the Government “at this point in time” to resolve the banking crisis, but he would “wait and see if Minister Noonan has proposals maybe that he has kept from the Dáil today”.
United Left Alliance and Socialist Party TD Joe Higgins said there had been a “total capitulation” by the Labour Party, “which was marshalling the troops to march on Frankfurt only five weeks ago, and now are stalled in the trenches, not getting even getting beyond Dublin Bay”.
He said the Minister was repeating the policy of the previous government, whereby “the taxpayers, the working people and the poor in this country are going to continue to pay the bad gambling debts of the major European banks”.
“We need to remake the European financial system from top to bottom, I would say, on the basis of public ownership and democratic control and accountability,” Mr Higgins told reporters last night.
