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Gilmore expresses concern at 'blank cheque' for banks

Issued : Tuesday 30 September, 2008

The Taoiseach must come into the Dáil today to account for the extraordinary action taken by the Government this morning.

The Government has effectively written the biggest blank cheque in history, exposing the Irish taxpayer to enormous liabilities. Estimates of the potential exposure vary between two and three times Irish GNP - perhaps as much as €500bn. The stalled U.S. rescue package for its banking system amounted to around 6% of its GNP. The package proposed by the government amounts to two to three times the Irish GNP.

This move will also have very serious consequences for the Irish debt level and the cost of borrowing for this country. This may in turn have implications for the maintenance of key public services.

As a result of this move the future economic welfare of the Irish people will now be inextricably linked to that of the six Irish banks who are to be the beneficiaries of the government plan.

It is also not clear what authority the government had to make such an offer to the banks, without the authorisations of the Dail.

We still have little clarity from Government as to the terms associated with this deal.

- What will the banks pay for this cover?
- Will the Government be recompensed by any bank that has to avail of it?
- Will the system of super-high salaries and bonuses continue in the banks, even though the state is covering their risks?
- How will the Government control and regulate new risks being taken on by the bank after today, since it has given a guarantee for two years?
- Will the banks continue to pay out dividends to shareholders?
- -What will the impact be on the cost of borrowing by the Irish Government, with further knock-on consequences for the Irish taxpayer?

These are but some of the questions that have to be answered. The Government claims to be protecting the taxpayer, but has provided no details. The biggest blank cheque in history has been written and no-one knows what terms and conditions are attached?