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Burton seeks details of rescue package for banks

Issued : Tuesday 30 September, 2008

The Dail and the public will require far more information on the government decision to 'safeguard the Irish banking system' than contained in this morning's brief statement from the Department of Finance, before judgement can be passed on what is being proposed.

This is by any standards an extraordinary development that may result in an exposure of as much as €400bn for the Irish taxpayer. The speed with which the government has moved to rescue the banking sector is in stark contrast to the blanket refusal to assist other sectors of the Irish economy that have been in trouble and in particular to their total indifference to the plight of the 70,000 workers who have lost their jobs in the last year alone.

The Minister for Finance, Brian Lenihan, must come into the Dail today to outline full details of this plan and the questions to which I will be seeking answers include the following:

- What is the full extent of the potential exposure of the Irish taxpayer?
- What guarantees have been put in place to protect the financial interests of the Irish taxpayer
- Is the programme going to be all risk for taxpayers, with very limited potential profit with knock on effects for public investment in infrastructure, health and education?
- What will the mechanism of the guarantee be? Will the government be taking out a form of insurance to cover this move? What will the cost of that be and will the premium come out of current spending?
- Will the Government use the crisis as a leverage to impose order on banks and markets with sweeping new laws that match the sweeping new liabilities?
- Will the Minister insist that those responsible for reckless policies are removed from all positions without golden handshake payouts?
- Will the banks be required to disclose non-performing loans to the building industry for land and construction? What guarantees can the Minister give us that this guarantee will not be used as a closet mechanism to bail out reckless loans to the developers?
- Will the government finance the operation with borrowed money -- on top of an exchequer deficit already projected to break EU limits for the next fiscal year?
- Will Brian Cowen abandon the property based tax breaks that have fuelled the construction bubble ?

The answers to these questions will determine whether this is a well-judged and necessary measure or merely a scheme to prop up reckless lending.