ALLOWING ANGLO-Irish Bank to be wound up could expose taxpayers to a €60 billion liability, Taoiseach Brian Cowen has insisted, as Opposition leaders described the bank as “rotten” and a “financial cesspit”.
There were sharp exchanges in the Dáil as Mr Cowen staunchly defended the Government’s approach to dealing with the nationalised bank and the State’s €4 billion injection.
He rejected suggestions that the Government “just decided” to support the bank rather than public services. The reality, he insisted, was that “letting everyone swing” by winding up Anglo-Irish would result in a far greater liability to the taxpayer because the bank has deposits of up to €64 billion.
Fine Gael leader Enda Kenny had said no jobs would be saved by the State’s €4 billion injection in the bank. “The situation is rotten to the core”. He said jobs were being lost in thousands of businesses all over the country, where lending facilities “cannot be or are not being made available to them” Labour leader Eamon Gilmore pointed out that the Government waited until the Dáil had adjourned for the bank holiday weekend before announcing its €4 billion investment in the bank and the following day the bank was looking for a further €3.5 billion. He described Anglo-Irish as a “financial cesspit”.
When he asked about impaired directors’ loans, the Taoiseach told him that €31 million of the total of €4.3 billion loss in the bank was for loans to former directors, but he insisted that “there have been no write-offs of these loans and the bank will seek full repayment. Mr Cowen added that “two serving directors have loans but they are performing fully.”
Mr Kenny had asked how much more finance would be made available to small businesses through the injection of capital, but Mr Cowen said that to save jobs “it is important that we have a viable financial system such that we can maintain the 1.8 million jobs in the country”.
The Fine Gael leader said that last September the Minister for Finance told the Dáil “there was no run on Anglo Irish Bank. We now know that there was a serious run on the bank. The Taoiseach told the House there were no capital shortages in Anglo Irish Bank. We now know there were serious capital shortages.” He added that “we also know there are 10 persons, unnamed, who have loans there of €30 million each. We also know there were serious irregularities in the way business was done. The situation is rotten.”
Mr Gilmore said funding for essential health services, school building programmes and special needs classes had been cut. “We are in a set of circumstances where the Government does not have money for anything except, apparently, banks.” Mr Cowen said however that “we have to support the financial system in this situation because the alternative of winding up the bank or allowing it to be wound up would expose the taxpayer to a far greater liability”.
All decisions “we have taken with regard to all banking matters are firstly about protecting the exposure of the taxpayer to the greatest possible extent and ensuring we have a viable banking system for the future”.
